Schwab clients were selective in August, pushing the STAX score lower for the first time since April despite market gains.

Key Takeaways:

The Schwab Trading Activity Index™ (STAX) decreased to 57.50 in August, down from its score of 59.80 in July.
Schwab clients appeared to grow more selective in August, pushing the STAX score lower for the first time since April, even as the markets advanced.
Options and ETF trading trends suggest clients sought diversified, defined-risk ways to stay exposed to the markets without fully rebuilding equity positions.

The Schwab Trading Activity Index™ (STAX) decreased to 57.50 in August, down from its score of 59.80 in July. 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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"August trading activity suggests Schwab’s retail clients were becoming more selective as markets recovered," said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab. "Rather than pulling back from the market, many appeared to rebalance, taking profits in high-beta software stocks after sharp rebounds while remaining engaged with growth and innovation leaders such as SpaceX (SPCX) and Nvidia (NVDA)."

Economic data during the August STAX period showed signs of slowing, with the July nonfarm payrolls report released early in the month declining by 23,000 and second quarter gross domestic product (GDP) rising just 1.5% on a seasonally adjusted annual basis. Monthly inflation growth also moderated over the summer.

Oil prices fell early in August before rebounding as tensions reemerged in the Middle East. Treasury yields, which had been closely correlated with oil, climbed throughout the month and may have contributed to investors’ caution. Hawkish remarks from Federal Reserve Chairman Kevin Warsh on the final afternoon of the STAX period sharply lifted September rate-hike odds, though the timing likely came too late to materially affect the overall August STAX score.

The S&P 500 Index rose 2.96% during the August STAX period, its strongest gain since May, yet client activity softened, underscoring a more cautious tone beneath the headline market advance. ETF demand reinforced that message. Two ETFs ranked among the top five net-buys, and four appeared in the top 10, suggesting clients preferred broader, diversified exposure over adding concentrated single-stock positions.

Options activity pointed to a similar shift. Call buying remained strong, particularly in companies tied to tech-heavy ETFs. But compared with prior periods when put buying was more common as a downside hedge, August’s options flow suggested investors were looking for defined-risk ways to stay exposed to the markets without fully rebuilding equity positions.

At the sector level, Industrials, Utilities, and Real Estate were the only S&P 500 sectors to attract net buying from Schwab’s retail clients in August, while Information Technology, Communication Services, and financials saw the largest net selling. From a demographic perspective, Gen X clients continued to lead net buying by age cohort, and self-directed traders remained much more skewed toward net buying when compared to self-identified investors.

Popular names bought by Schwab clients during the period included:

Space Exploration Technologies Corp. (SPCX)
Micron Technology Inc. (MU)
NVIDIA Corp. (NVDA)
Intel Corp. (INTC)
Alphabet Inc. (GOOGL)

Names net sold by Schwab clients during the period included:

Palantir Technologies Inc. (PLTR)
Microsoft Corp. (MSFT)
ServiceNow Inc. (NOW)
Salesforce Inc. (CRM)
Oracle Corp. (ORCL)

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.

More information is available at aboutschwab.com. Follow us on X, Facebook, YouTube, and LinkedIn.

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MEDIA:

Margaret Farrell

Charles Schwab

Phone: 203-434-2240