The Schwab Trading Activity Index™ (STAX) dropped to 47.10 in September, down from 53.16 in August. This unique index tracks retail investor behavior by analyzing stock positions and trades from millions of Schwab client accounts to show what investors were doing in the markets each month.
For the period ending September 27, 2024, the activity was considered “moderately low” compared to historical trends.
Overall, Schwab clients were selling more stocks than buying. However, they bought more in the Energy and Consumer Staples sectors, while selling the most in Information Technology, Consumer Discretionary, and Communication Services.”In September, there was a lot of economic data affecting the markets, and Schwab’s clients reacted by reducing risk and taking profits,” said Joe Mazzola, Head Trading & Derivatives Strategist at Charles Schwab. “It seems that the market has accepted the Federal Reserve’s approach to policy decisions, and many clients are optimistic about the U.S. economy. However, the unexpected rate cut in September surprised many, and with all the economic data from the month, it makes sense that clients were more cautious, even as the markets performed well. This is one of the biggest differences we’ve seen between market performance and the STAX score in the history of our analysis.”
“In September, there was a lot of economic data affecting the markets, and Schwab’s clients reacted by reducing risk and taking profits,” said Joe Mazzola, Head Trading & Derivatives Strategist at Charles Schwab. “It seems that the market has accepted the Federal Reserve’s approach to policy decisions, and many clients are optimistic about the U.S. economy. However, the unexpected rate cut in September surprised many, and with all the economic data from the month, it makes sense that clients were more cautious, even as the markets performed well. This is one of the biggest differences we’ve seen between market performance and the STAX score in the history of our analysis.”
Stocks had a rough start in September, with the S&P 500 dropping over 4% in the first week – its worst week of 2024 so far. Although stocks bounced back the next week, concerns over seasonal trends (September is often seen as a weak month for stocks), rising geopolitical tensions, and an upcoming Federal Reserve meeting made clients sell more stocks in the first two weeks. Unlike in August, these sales weren’t followed by a rush to buy the dip. Instead, many clients moved some of their money from stocks into bonds, which saw strong inflows during the STAX period.
By the end of September, the Dow Jones and S&P 500 reached new highs of 42,628.32 and 5,767.37. The Nasdaq Composite also rose 2.68% to 18,189.17, just 5% below its all-time high from July.
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