Schwab Trading Activity Index™: STAX Score up in September Despite Inflation Concerns

Schwab clients net bought the Consumer Discretionary, Industrials, Consumer Staples and Financials sectors but favored diversified exposure through ETFs

Key Takeaways:

• The Schwab Trading Activity Index™ (STAX) increased to 58.92 in September, up from its score of 57.50 in August.
• Schwab clients diversified exposure with broad ETF buying even as they used pullbacks and technical support to add exposure to favored growth stocks.
• A recent client survey indicates investor sentiment could turn more bearish as many anticipate at least one interest rate hike in October.

WESTLAKE, Texas--(BUSINESS WIRE)--The Schwab Trading Activity Index™ (STAX) increased to 58.92 in September, up from its score of 57.50 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.

“The STAX score in September reflected sentiment that was more bullish than the major indices reflected, but the investment mix indicated that clients wanted to participate and maintain market exposure while mitigating some of the risks that come with individual stocks,” said Joe Mazzola, Head Trading Strategist at Charles Schwab. “ETFs accounted for five of the top 10 buys for the first time, which may reflect an effort on our clients’ part to reduce their overall portfolio beta.”

September’s resilient macro backdrop nonetheless reinforced many investors’ concerns about persistent inflation. Strong U.S. manufacturing and retail sales data, along with a hotter-than-expected August core Consumer Price Index reading, led the U.S. Federal Reserve to enact a 25-basis-point rate increase, its first raise in three years. Late in the month, the Atlanta Fed’s GDPNow estimate showed third-quarter gross domestic product growth tracking at a 5% annual pace, prompting investors to consider another potential Fed increase in October.

Oil prices rose as Middle East tensions intensified, while Treasury yields moved higher amid rate increases by the Fed and other central banks. By the end of the September STAX period, the U.S. 10-year Treasury yield was near 5.2%, its highest level since 2007, and Japanese yields were at 30-year highs. The dollar strengthened and gold weakened in the more hawkish rate environment.

Options activity reflected confidence in September, with clients maintaining upside exposure through ETF call buying and put selling in technology stocks, particularly semiconductor and memory chip makers.

Seven of 11 S&P 500 sectors recorded net buying in September. Consumer Discretionary, Industrials, Consumer Staples, and Financials led net buying, while Information Technology, Communication Services, and Health Care saw the largest net selling. From a demographic perspective, most cohorts became more bullish, with Gen X clients continuing to lead net buying. The more active traders tracked by the STAX remained heavily skewed toward net buying in comparison to their less active investor counterparts.

A recent survey of more than 450 clients indicated that investors’ outlook for October may turn more bearish, as bullishness fell to 17% from 22% month-over-month and bearishness rose to 50% from 38%. Active trader respondents remain more constructive than investors and more willing to “buy the dip” in the event of a market decline (58% vs. 31%). Inflation concerns are likely to persist as roughly 76% of respondents expect at least one additional Fed rate hike before year-end and 83% view a return to the Fed’s 2% inflation target before the end of 2027 as unlikely.

Popular names bought by Schwab clients during the September period included:

• Space Exploration Technologies Corp. (SPCX)
• Amazon.com Inc. (AMZN)
• Broadcom Inc. (AVGO)
• NVIDIA Corp. (NVDA)
• Alphabet Inc. (GOOGL)

Names net sold by Schwab clients during the period included:

• Meta Platforms Inc. (META)
• Advanced Micro Devices Inc. (AMD)
• Intel Corp. (INTC)
• Microsoft Corp. (MSFT)
• Palantir Technologies Inc. (PLTR)

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.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction.

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.

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