MW Why individual investors are cautious ahead of earnings for Microsoft, Amazon and the rest of the 'Magnificent Seven.'
By Gordon Gottsegen
Retail investors aren't trading the megacap tech stocks with their usual fervor
Most of the "Magnificent Seven" tech companies report their first-quarter earnings this week
It will be a busy week for first-quarter earnings - with Microsoft $(MSFT)$, Meta Platforms (META), Google parent Alphabet $(GOOGL)$ $(GOOG)$ and Amazon.com (AMZN) all reporting after the bell on Wednesday, and Apple $(AAPL)$ reporting on Thursday.
Together, these five companies represent about 25.8% of the market capitalization of the S&P 500 SPX, according to Dow Jones Market Data.
Earnings from these "Magnificent Seven" companies may be enough to move the stock market, but it's yet to be seen whether they'll be enough to motivate retail investors.
Everyday investors have been buying fewer stocks than average ever since the start of the Iran war. There were even a few days in March and April when they were net sellers of stocks. This is atypical for retail investors, who usually buy more stocks in aggregate than they sell. On top of that, market volatility pushed many to sell on days that the market rallied, and sit on the sidelines instead of buying dips.
Read: Individual investors sat out yesterday's stock-market rally - and made this move instead
This retail-investor slowdown has been felt among the Magnificent Seven stocks, which typically rank among retail's most traded tickers. Retail-investor trading volume for the seven Big Tech stocks accounted for only 11% of total trading over the last trading week, according to a note from Citigroup's equity-trading strategy team. That's a significant decline compared with previous years.
Retail trading activity bottomed around 9% - its lowest level over the past four years
Citi's data showed that retail investors accounted for a slightly larger percentage of total Magnificent Seven trading volumes last week, but that's only due to a slowdown in institutional trading.
While Magnificent Seven trading activity among retail investors has declined 9% in April, total volumes - including activity from both retail and institutional investors - were down 26%, the note said. Furthermore, all stocks in the group also were below their 25th percentile of retail interest since 2022.
Retail's share of Meta's trading volume also hit a four-year low last week, accounting for just 5.7% of total activity, according to Citi. For context, this represents a 73% decrease from its November 2022 high of 21%.
However, this doesn't mean retail is falling out of love with the Magnificent Seven. Stuart Kaiser, head of equity-trading strategy at Citi, said this is more indicative of retail investors trading less actively overall.
"The main takeaway is that retail-investor impact has declined substantially as a share of total trading volumes. They were as much as 15% of trading volumes back in October, 10.2% on average in January and now just 7.5%. That said, the 7.5% is a modest improvement from the lows in late March," Kaiser told MarketWatch.
Retail's options positioning is also defensive. The Citi note showed that the ratio of puts to calls in zero-day options held by retail investors was positive for most of 2026 - meaning retail options traders hedged themselves for a market move downward by buying more puts than calls. That ratio switched briefly in March, but now it's back to showing bearish positioning among individual investors.
Retail investors have also been trading defensive sectors - including consumer staples, utilities and real estate - more actively, according to Citi's data.
Retail investors still favor tech, but the muted trading among the Magnificent Seven names show that these investors are acting cautiously ahead of earnings. That means they could miss out if any of these companies rally after earnings - but it also means they'll be protected if the rally reverses.
-Gordon Gottsegen
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(END) Dow Jones Newswires
April 27, 2026 14:06 ET (18:06 GMT)
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