Schwab Trading Activity Index™: STAX Score Drops in April as Retail Clients Cut Tech Exposure
Second consecutive month-over-month decline is the largest in a year despite major indexes rebounding
The Schwab Trading Activity Index™ (STAX) decreased to 50.10 in April, down from its score of 56.04 in March. 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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"Retail clients turned more cautious in April, leading to a second consecutive month-over-month decline in the STAX score, which fell by the biggest margin we've seen in a year," said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab. "Each April, we tend to see clients selling in advance of Tax Day and reinvesting afterward. This year, though, we also observed a meaningful rotation out of higher-beta individual holdings and into broad-based lower-beta ETFs, which not only led to a drop in the score but appears to indicate a meaningful dip in sentiment."
Major indexes rebounded through most of the month amid high oil prices and ongoing Middle East tensions, with a ceasefire announcement easing near-term concerns. A powerful chip rally also took hold as the PHLX Semiconductor Index (SOX) rose 47% over the STAX period, including an 18-session winning streak.
The March jobs report showed better-than-expected payroll growth of 178,000. Retail sales and inflation data stayed above the Fed's 2% goal, but roughly in line with expectations, reducing perceived odds of an interest rate hike and improving expectations for at least one rate cut later this year. Inflation concerns eased modestly as crude stabilized despite persistent worries about slowing growth.
Clients were net sellers in nine of 11 S&P 500 sectors, buying only Consumer Staples and Utilities—both of which are traditionally considered defensive. After Information Technology, the heaviest net selling was in Consumer Discretionary, followed by Financials and Energy. Notably, many Schwab clients shifted toward diversified exchange-traded funds (ETFs) in April; five of the month's 10 most net-bought names were ETFs.
From a demographic perspective, market exposure fell across all age groups in April. Generation X (1965-1980) maintained the highest exposure to the markets, followed by Baby Boomers (1946-1964), Millennials (1981-1996) and finally Generation Z (1997-2012), which hit lows last seen in September of last year.
Sentiment also appeared to fall sharpest among the STAX sample's most active traders, whose market exposure hit their lowest levels since December.
Popular names bought by all Schwab clients during the period included:
- Microsoft Corp. (MSFT)
- Tesla Inc. (TSLA)
- Palantir Technologies Inc. (PLTR)
- Micron Technology Inc. (MU)
- Netflix Inc. (NFLX)
Names net sold by Schwab clients during the period included:
- NVIDIA Corp. (NVDA)
- Amazon.com Inc. (AMZN)
- Advanced Micro Devices Inc. (AMD)
- Intel Corp. (INTC)
- Broadcom Inc. (AVGO)
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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Margaret Farrell
Director, Corporate Communications
(203) 434-2240
margaret.farrell@schwab.com