Castle Securities stated that the drivers of the U.S. stock market bull market remain solid, while retail investor leveraged betting has cooled down.

Castle Securities stated that the factors driving the U.S. stock market to record highs this year remain solid, even after the cooling of speculative trading by retail investors. The market is transitioning from a capital flow-driven environment back to one led by earnings, corporate demand, and macroeconomic conditions, wrote Scott Rubner, head of equity and equity derivatives strategies at the market maker, in a report to clients. According to data from Castle Securities, retail investors' stock sell-off last week was the largest since 2022. Rubner noted that the retail sell-off was mainly concentrated in technology stocks. He mentioned that the retreat of retail investors caused the assets of leveraged exchange-traded funds to drop by 28%, to $154 billion. Meanwhile, the cost of stock financing has decreased, indicating that the pressure faced by Wall Street's trading desks has lessened, and demand for leveraged capital has declined.