Schwab Trading Activity Index™: Retail Investor Enthusiasm Surges to Four-Year High

Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab, commented on the findings, noting that despite a slight retreat in major market averages from their recent all-time highs, retail investors remained undeterred. “There was no ‘June swoon’ to be found among Schwab clients,” he stated. Following a minor dip in the first week of June, the STAX steadily climbed, with net buying outpacing net selling by more than two-to-one.

The increase in the STAX score reflects retail investors' tendency to buy the dip during mid-month market pullbacks. Economic indicators released in June indicated a familiar landscape, with inflation rising slightly and job numbers holding steady. The Federal Reserve's stance under Chairman Kevin Warsh appeared hawkish, with the probability of a rate hike later in the year rising from 50% to nearly 83% by month-end.

In terms of client options activity, results were mixed. Schwab clients displayed net buying on popular broad-based index options and select single-stock names. Interestingly, options traders capitalized on discrepancies between index and single-stock volatility by selling elevated implied volatility. Notably, the activity suggested a neutral-to-bullish sentiment, as put selling outstripped call selling for several single-stock names, indicating a focus on generating income through short options strategies.

Sector-wise, Information Technology dominated the net-buy list in June, followed closely by Communication Services and Consumer Discretionary. The top five purchases by Schwab clients were all integral to these sectors. Conversely, while selling activity remained light across the board, Financials, Health Care, and Consumer Staples were among the sectors that experienced the most selling pressure.

An intriguing aspect of the STAX report was its generational breakdown, which showed a rise in scores across all age groups, building on the rebound from May. Generation X (1965–1980) led the charge, reaching a two-year high in bullish sentiment. Meanwhile, Baby Boomers (1946–1964) showed more cautious behavior, trailing behind, while Millennials (1981–1996) followed closely. Generation Z (1997–2012) continued to display the highest level of risk aversion among all groups.

During June, Schwab clients favored several popular stocks, including:

The STAX is derived from a complex proprietary formula that evaluates a sample from Schwab’s vast client base of millions of funded accounts that have engaged in trading. By assessing the holdings and positions of this statistically significant sample, Schwab can generate the individual scores that culminate in the monthly STAX figure.

As the financial landscape continues to evolve, the insights provided by the STAX serve as a valuable tool for understanding retail investor sentiment and behavior, indicative of broader market trends. Charles Schwab's commitment to illuminating investor activity underscores its role as a leader in the financial services industry, dedicated to championing investor goals with transparency and integrity.