The Schwab Trading Activity Index™ (STAX) fell to 53.16 in August, down from 54.81 in July. As the only index of its kind, STAX is a proprietary tool that examines retail investor stock positions and trading activity from Schwab’s millions of client accounts, providing insights into investor behavior and market positioning each month. The August reading, covering the five-week period ending August 30, 2024, is considered “moderate” in comparison to historical averages.
“Schwab clients seemed to shift from equities to fixed income securities as a strategy to reduce risk, leading to a lower STAX score this month,” said Joe Mazzola, Head Trading & Derivatives Strategist at Charles Schwab. “Although the trading period began with a notable downturn on August 5—often described as a ‘meltdown’ or ‘crash’—the markets recovered swiftly. Despite overall net selling, many Schwab clients used the volatility as an opportunity to buy the dip.”
Throughout August, equity market volatility persisted. Nevertheless, major indices recorded multi-day winning streaks, and the Dow Jones Industrial Average reached a new high of 41,585.21 on August 30. Early in the month, the “yen carry trade” was still active following a 15-basis-point increase by the Bank of Japan on July 31. The unwinding of this trade likely alleviated some of the selling pressure on U.S. equities. However, U.S. markets faced another significant sell-off later in August due to weaker-than-expected job data.
Initial jobless claims for August 1 were reported at 249,000, slightly above expectations. While this figure alone doesn’t indicate a softening labor market, the Federal Open Market Committee (FOMC) had recently indicated progress towards employment and inflation targets, with a possible interest rate cut anticipated in September. The U.S. Bureau of Labor Statistics’ Employment Situation Summary on August 2 reported an increase in the unemployment rate to 4.3% and a rise in non-farm payrolls by 114,000, both falling short of consensus estimates.
The Consumer Price Index (CPI) and Producer Price Index (PPI) were both slightly below expectations, at 2.9% and 0.1%, respectively. Additionally, Q2 Gross Domestic Product (GDP) estimates were revised up to 3%, compared to 1.4% for Q1, driven by increased consumer spending and business and inventory investments.
The CBOE Volatility Index (VIX) saw a 50% spike early in August but then moderated, closing 9.82% lower at 14.78. The 10-year Treasury yield fell by 6.88%, ending the period at 3.911%. The US Dollar Index decreased by 2.51% to close at 101.70. As supply outpaced demand, front-month Crude Oil futures dropped 4.68%, ending at $73.55 per contract.
During this period, Schwab clients favored the following stocks:
- NVIDIA Corp. (NVDA)
- Amazon.com Inc. (AMZN)
- Intel Corp. (INTC)
- Microsoft Corp. (MSFT)
- Advanced Micro Devices Inc. (AMD)
Conversely, the following stocks saw net selling by Schwab clients:
- Meta Platforms Inc. (META)
- Apple Inc. (AAPL)
- Starbucks Corp. (SBUX)
- PayPal Holdings Inc. (PYPL)
- Palo Alto Networks Inc. (PANW)
