JPMorgan says retail investors could drive up to $500 billion of inflows into U.S. equities in the second half of the year, helping to fuel a 10% rise in the market.

The strategist team led by Nikolaos Panigirtzoglou estimates that of the projected $630 billion in total retail stock fund inflows this year, around $360 billion has yet to materialize. These investors staged aggressive dip-buying in March and April but opted to lock in profits during May and June. In other words, the recent pause in retail flows is primarily due to profit-taking after the sharp V-shaped rebound in U.S. equities, not a shift in underlying investor behavior.

Starting in July, retail investors are expected to resume buying, once again pushing stock prices higher, JPMorgan said.

The JPMorgan team also highlighted another surprising source of potential market support: foreign investors. Balance of payments data and fund flow indicators show that foreign buying of U.S. equities has slowed since February. However, global investors cannot avoid exposure to the largest and most important growth segment in global markets—the S&P 500 and the “Magnificent Seven” megacap tech stocks. Eventually, international investors are likely to overweight U.S. equities again.

That said, a rebound in foreign inflows may first require stabilization in the U.S. dollar. According to JPMorgan, some investors are steering clear of U.S. stocks over fears of further dollar weakness. If the dollar stabilizes, it could attract an additional $50 billion to $100 billion in foreign equity inflows.

As for other potential buyers, hedge funds, which reduced risk early this year, have already increased their bullish positions but may have limited room to add further. Quantitative or systematic equity funds trimmed positions in May and June, but JPMorgan believes they could rebuild exposure later this year.

Overall, with retail investors taking the lead, total net inflows into U.S. equities could approach $500 billion in the second half of 2025—enough to power an additional 5% to 10% market rally, JPMorgan said.

However, not all investment flows will favor equities. Pension funds and insurance companies have been steadily shifting away from stocks and into fixed income. This trend is expected to continue throughout 2025, with net equity outflows from these institutional investors estimated at around $360 billion for the year.