The speed at which investors borrow money to buy stocks has clearly slowed down, which has sparked concerns that the market may be about to decline.

The latest data from the U.S. Financial Industry Regulatory Agency (FINRA) shows that the year-over-year growth rate of margin trading debt fell from 53.7% in May to 31.4% in September. Paul Ciana, a technical strategist at Bank of America, pointed out in a report on Friday that the decline in lending momentum from extreme levels has previously been associated with market highs.

According to an analysis by Bank of America, the growth rate in May 2026 was the fourth highest since 1998. The three previous extreme levels occurred in 2000, 2007, and 2021, and after each of these periods, the stock market experienced declines.

Earlier this year, the growth rate of borrowing far exceeded the rate of increase in stock prices. Analysts typically view high levels of borrowing as a negative signal, similar to a bear-bull sentiment indicator.

In September, the scale of margin trading debt was 1.48 trillion US dollars, which is 1.5% lower than the record of 1.5 trillion US dollars set in June.

High leverage can trigger a chain reaction during market downturns. Falling prices can lead to demands for additional collateral or forced sales, which in turn exacerbate the downward trend.

Retail investors are particularly vulnerable to such impacts. For example, Tesla investor Hy Luu refinanced their housing during the stock's decline in 2022 in order to raise $30,000 to repay margin trading debts.

Bank of America believes that other market warning signs include the widening credit spreads on high-yield bonds, as well as the shift of funds to defensive sectors such as healthcare and essential consumer goods.

However, in a report on Tuesday, the U.S. Bank’s equity derivatives team stated that rotating into these sectors has instead pushed them to a “bubble risk level.” They added that similar changes occurred during the internet bubble at the end of the 1990s and during the rebound from the COVID-19 pandemic. “These developments further prove that the market is still evolving towards a more bubble-like state.”

From a bullish perspective, the mid-term elections could alleviate some market uncertainties and trigger a rebound, Ciana noted. "Under normal circumstances, unless there are more serious downside risks, risk assets such as the S&P 500 tend to rebound after mid-term elections."