American households are allocating so much money to U.S. stocks that the valuation of the whole market is now dependent on their appetite, according to JPMorgan. Individual investors have become the most important holder of U.S. equities, owning around 60% of the universe, the Wall Street firm said. This record level of ownership creates a lockstep movement between the price-earnings ratio of the S & P 500 and the retail flow into the market. “The higher the appetite by US households to hold equities in their portfolios, the more expensive the equity market becomes and vice versa,” strategists led by Nikolaos Panigirtzoglou said in a note to clients. This correlation also means that if households start to flee the stock market, their action could effectively lower market valuation. It has become increasingly likely as President Donald Trump ‘s protectionist trade policy stoked fears of an economic slowdown, causing a three-week pullback in the S & P 500 that dragged it into correction territory. There have been early signs that retail investors have stopped buying the dip as the stock market sold off significantly. JPMorgan noted that this cohort appears to have become rather underweight equities in the fund space after the correction in the S & P 500. .SPX 1Y mountain S & P 500 U.S. households were estimated to hold 42% of their total financial assets in equities in the first quarter, down slightly from 43.5% in the previous quarter, which was a record high, according to JPMorgan. There has been an investing boom on Main Street as popular trading platforms like Robinhood enabled small investors to ride the bull market to record highs over the past few years. The S & P 500 has recovered some of the losses, sitting around 7% below its all-time high reached in February.