The Schwab Trading Activity Index, also know as STAX, increased to 44.73 in January, up slightly from its score of 44.56 in December. The STAX is a proprietary, behavior-based index that analyzes retail investor stock positions and trading activity to illuminate what investors were actually doing and how they were positioned in the markets each month.
The reading for the four-week period ending January 26, 2024 ranks “moderate low” compared to historic averages.
“Schwab’s clients were net buyers of equities in January,” according to Joe Mazzola, Director of Trading and Education at Charles Schwab. “While exposure was still relatively low when viewed in a historical context, we saw that for the most part, our clients stayed in step with the market rally, finding opportunities to increase exposure in particular to the ‘Magnificent Seven’ companies as the new year began.”
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How did the US market perform during this period?
US equity markets picked up right where they left off last year, posting solid gains during the January STAX period. Economic data supported the rally.
The US Bureau of Labor and Statistics’ Employment Situation Summary released on January 5 showed that nonfarm payrolls increased by 216,000 in December, which was better than expected. The unemployment rate was unchanged at 3.7%.
On January 11, it was reported that the Consumer Price Index (CPI) rose by 0.3% for the month of December to 3.4% year-over-year, slightly hotter than expected. Later in the month, the U.S. Bureau of Economic Analysis released its first estimate of fourth quarter Gross Domestic Product (GDP), and the release showed an annualized growth rate of 3.3% during the quarter.
US market beat Wall Street forecasts
While this was a notable slowdown from the third quarter rate of 4.9%, it was much better than the street forecast of 2%. This more resilient economic picture pushed back on the market’s anticipation of significant monetary easing in 2024.
During the January STAX period, the S&P 500 (SPX) continued to reach new heights, with a rise of 2.54% to close at 4890.97. The CBOE Volatility Index (VIX) inched higher from 12.45 to 13.26, reflecting an increase in risk premium, though it remained low by historical measures. The 10-year Treasury yield rose to 4.14%, reversing from its recent trend lower. The U.S. Dollar Index strengthened during the period, ending at 103.43. March Crude Oil Futures moved 8.9% higher, settling at $78.01 per barrel.
Popular names bought by Schwab clients during the period included:
- Tesla Inc. NASDAQ:TSLA
- NVIDIA Corp. NASDAQ:NVDA
- Amazon.com Inc. NASDAQ:AMZN
- Microsoft Corp. NASDAQ:MSFT
- Advanced Micro Devices NASDAQ:AMD
Names net sold by Schwab clients during the period included:
- Bank of America Corp. NYSE:BAC
- Walmart Inc. NYSE:WMT
- General Motors Co. NYSE:GM
- Carnival Corp. NYSE:CCL
- Warner Bros. Discovery Inc. [NYSE:WBD]
How is the Schwab STAX index calculated?
The STAX value is calculated based on a complex proprietary formula. Each month, Schwab pulls a sample from its client base 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.
