Schwab Trading Activity Index™: November Sees Modest Uptick Amid Fed Rate Cut and Election Results
The Schwab Trading Activity Index™ (STAX) saw a modest increase in November, rising to 49.22 from 48.37 in October. This proprietary, behavior-based index, which tracks retail investor stock positions and trading activity from Schwab’s millions of client accounts, provides unique insights into the actions of investors. It reflects what clients were doing and how they were positioned in the markets over a specific period. For the five-week stretch ending November 29, 2024, the reading was considered “moderate low” compared to historical averages.
Buying Trends in Tech, Healthcare, and Consumer Staples
November’s activity showed that more Schwab clients were net buyers of equities than net sellers, with the most significant purchases in the Information Technology, Health Care, and Consumer Staples sectors. On the flip side, the Communication Services, Financials, and Consumer Discretionary sectors saw the most selling activity.
While equities saw a net buying trend, clients also continued to diversify their portfolios by purchasing other assets such as ETFs, mutual funds, Treasuries, and fixed income securities. On a dollar basis, Schwab clients were, in fact, net sellers of equities.
“November’s trading activity reflected a clear shift in sentiment as the U.S. election neared its conclusion and the Federal Reserve announced another rate cut,” said Joe Mazzola, Head of Trading & Derivatives Strategist at Charles Schwab. “However, there were notable rotations within equity sectors, and we expect that in December, investors will focus on year-end spending, tax deadlines, and the possibility of more rate cuts from the Fed.”
Market Volatility Eases After Fed and Election Developments
With the conclusion of both the Fed’s interest rate decisions and the U.S. election, market uncertainty and volatility began to subside. This shift is reflected in the rise in equity prices and a fall in the CBOE Volatility Index® (VIX). During much of the STAX period, stock prices and interest rates had moved in tandem, but in the final weeks, this relationship reversed as rates dropped while stocks continued to climb. All three major U.S. stock indices hit new all-time highs during the November period, and a broad-based rally ensued, with most stocks staying above their 200-day moving averages.
Several economic indicators also provided clarity in November. The U.S. Bureau of Labor Statistics reported on November 1 that both non-farm payrolls and the unemployment rate (4.1%) remained unchanged. The S&P 500 responded with a slight advance of just under 25 points. On November 7, the Federal Reserve cut interest rates by 25 basis points and signaled a shift toward prioritizing its full employment mandate over inflation control. Later in the month, the Consumer Price Index (CPI) showed inflation at 2.6% for the previous year, while the Producer Price Index (PPI) came in at 0.2%, in line with expectations. The S&P 500 saw minor declines following these reports, driven by falling Treasury yields.
Key Market Data for November
The VIX dropped by 26% during November, closing at 13.49 by the end of the period. The 10-year Treasury yield stood at 4.172%, and the U.S. Dollar Index strengthened by 1.62%, reaching 105.62. Meanwhile, WTI Crude Oil futures fell by 5.27%, ending the period at $68.00 per barrel.
Notable Stocks Bought and Sold by Schwab Clients
During November, Schwab clients showed particular interest in the following stocks:
- NVIDIA Corp. (NVDA)
- Palantir Technologies Inc. (PLTR)
- Advanced Micro Devices Inc. (AMD)
- Super Micro Computer Inc. (SMCI)
- MicroStrategy Inc. (MSTR)
Conversely, the most sold stocks included:
- Apple Inc. (AAPL)
- Walt Disney Co. (DIS)
- Tesla Inc. (TSLA)
- Bank of America Corp. (BAC)
- Ford Motor Co. (F)
