Schwab trading index rises to 41.79 in July amid cautious investor sentiment
Charles Schwab Corp.'s proprietary trading activity index increased to 41.79 in July from 40.66 in June, according to a company statement. The Schwab Trading Activity Index (STAX) analyzes retail investor stock positions and trading activity from millions of client accounts for the four-week period ending July 25.
The July reading ranks as "low" compared to historic averages. Schwab clients were net sellers of equities during the month, with the highest net selling activity in the Information Technology sector. Net buying occurred in Communication Services, Health Care and Financials sectors.
"The S&P 500 may have hit new all-time highs in July, but when we consider the ways Schwab's retail clients are engaging with the markets, we're not seeing the kinds of risk-on strategies that would indicate a lot of confidence in the rally's longevity," said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab.
Popular stocks purchased by Schwab clients included NVIDIA Corp. (NASDAQ: NVDA), Tesla Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Amazon.com Inc. (NASDAQ: AMZN), and UnitedHealth Group Inc. (NYSE: UNH).
Stocks net sold by clients included Apple Inc. (NASDAQ: AAPL), Ford Motor Co. (NYSE: F), Advanced Micro Devices Inc. (NASDAQ: AMD), Boeing Co. (NYSE: BA), and Nike Inc. (NYSE: NKE).
The Cboe Volatility Index fell below 15 by late July, well below its historic 20 average. Economic data showed 147,000 U.S. jobs created in June with unemployment dropping to 4.1%. June retail sales grew 0.6% from May, while preliminary July University of Michigan Consumer Sentiment rose to 61.8.
Second quarter earnings season saw around 83% of companies exceeding Wall Street expectations, with blended profit growth estimates rising during the period.