Schwab clients were net sellers of equities
overall; At a sector level, they were net buyers of Energy and
Consumer Staples, while Information Technology, Consumer
Discretionary, and Communication Services saw the most selling
The Schwab Trading Activity Index™ (STAX) decreased to 47.10 in
September, down from its score of 53.16 in August. The only index
of its kind, the STAX is a proprietary, behavior-based index that
analyzes retail investor stock positions and trading activity from
Schwab’s millions of client accounts to illuminate what investors
were actually doing and how they were positioned in the markets
each month.
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The reading for the four-week period ending September 27, 2024,
ranks “moderate low” compared to historic averages.
“In September there was no shortage of market-affecting economic
data, and Schwab’s clients responded in kind by de-risking and
taking profit opportunities,” said Joe Mazzola, Head Trading &
Derivatives Strategist at Charles Schwab. “For now, it seems that
the market has accepted the proactive framing the Fed has adopted
with regards to its policy decision, and in large part we’re seeing
that clients are optimistic about the U.S.’s economic prospects.
But there’s no doubt that the extent of the rate cut in September
caught many by surprise and, taken in combination with all the
other economic data swirling during the month, it makes sense that
clients pulled back a bit even as the markets soared – although it
is worth noting that this is one of the biggest divergences we’ve
seen between market performance and the STAX score in the history
of this analysis.”
Equities got off to a rough start in September, with the S&P
500 down by more than four percent for the first week - its worst
week of 2024 to-date. Though equities recovered the very next week,
it’s possible that the weak start played into concerns over
seasonality (some traders may view September as a historically weak
month for stock performance), and amid a backdrop of rising
geopolitical tensions and an impending U.S. Federal Reserve
meeting, clients chose to de-risk and shed equities in the first
two weeks of the month. In contrast to August’s activity, those
sales were not met with corresponding equity dip buys. In fact,
many clients rotated a portion of their portfolios from equities
into fixed income, which experienced strong inflows during the STAX
period.
Both the Dow Jones Industrial Average® and the S&P 500 hit
new highs of 42,628.32 and 5,767.37 respectively in the closing
days of the September STAX period. The Nasdaq Composite closed the
period at 18,189.17, up 2.68% and within five percent of its
all-time-high set in July of this year.
The September STAX period was heavily impacted by market-moving
economic data. On September 5, initial jobless claims came in at
227,000, slightly fewer than expected. Despite this favorable data,
the S&P 500 sold off by 1.75% the following day. The U.S.
Bureau of Labor and Statistics released its Employment Situation
Summary on September 6, which showed non-farm payrolls rose by only
142,000 and revisions to prior months’ data that underscored a
softening labor market. The unemployment rate did fall to 4.2%, but
the S&P 500 sold off by more than 90 points regardless. The
Consumer Price Index (CPI) came in better than expected at 2.5% for
the trailing 12 months and the Producer Price Index (PPI) increased
0.2%, which was in-line with expectations. Second quarter Gross
Domestic Product (GDP) estimates remained at 3% while the real
first quarter GDP was revised upwards from 1.4% to 1.6%; the
primary drivers were increased consumer and federal government
spending.
On September 18, the FOMC announced a 50-basis point reduction
to the Fed Funds rate, its first rate cut in four years. While a
rate cut was widely anticipated, the decision to cut by 50 bps was
a surprise to many market participants. The S&P settled nearly
100 points higher the following day and continued to rally through
the remainder of the September STAX period.
The CBOE Volatility Index® (VIX) spiked (intra-month) by 50% for
the second consecutive month and closed the period 13% higher at
16.96. The 10-year Treasury yield fell by 4.14% to close the period
at 3.75%. The U.S. Dollar Index declined, closing at 100.42, down
1.26%. Front month WTI Crude Oil futures fell by 7.30% to close the
period at $68.18 per contract, as current supply and output
forecasts from Saudi Arabia continued to outpace demand.
Popular names bought by Schwab clients during the period
included:
- NVIDIA Corp. (NVDA)
- Palantir Technologies Inc. (PLTR)
- Intel Corp. (INTC)
- Alphabet Inc. (GOOG/GOOGL)
- Microsoft Corp. (MSFT)
Names net sold by Schwab clients during the period included:
- Tesla Inc. (TSLA)
- Advanced Micro Devices Inc. (AMD)
- Alibaba Group Holding Ltd. (BABA)
- AT&T Inc. (T)
- Nio Inc. (NIO)
About the STAX
The STAX value is calculated based on a complex proprietary
formula. Each month, Schwab pulls a sample from its client base of
millions of funded accounts, which includes accounts that completed
a trade in the past month. The holdings and positions of this
statistically significant sample are evaluated to calculate
individual scores, and the median of those scores represents the
monthly STAX.
For more information on the Schwab Trading Activity Index,
please visit www.schwab.com/investment-research/stax. Additionally,
Schwab clients can chart the STAX using the symbol $STAX in either
the thinkorswim® or thinkorswim Mobile platforms.
Investing involves risk, including loss of principal. Past
performance is no guarantee of future results. Content intended for
educational/informational purposes only. Not investment advice, or
a recommendation of any security, strategy, or account type.
Historical data should not be used alone when making investment
decisions. Please consult other sources of information and consider
your individual financial position and goals before making an
independent investment decision.
The STAX is not a tradable index. The STAX should not be used as
an indicator or predictor of future client trading volume or
financial performance for Schwab.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
X, Facebook, YouTube, and LinkedIn.
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At the Company Margaret Farrell
Director, Corporate Communications (203) 434-2240
margaret.farrell@schwab.com
Charles Schwab (NYSE:SCHW)
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