Schwab Trading Activity Index™: STAX Score Soared in February, Defying AI Panic

Key Terms

ai technical

Artificial intelligence (AI) is technology that enables machines to mimic human thinking and learning, allowing them to analyze information, recognize patterns, and make decisions. For investors, AI matters because it can improve how businesses operate, create new products, or identify opportunities faster and more accurately than humans alone, potentially impacting company success and market trends.

gross domestic product (gdp) financial

Gross domestic product (GDP) measures the total value of all goods and services produced within a country's borders over a set period, like a nation’s economic “paycheck” or scorecard. Investors use GDP to gauge the health and direction of an economy because faster growth usually means higher potential sales and profits for companies, while slower growth can signal weaker corporate earnings, changing interest rates and shifts in market confidence.

private credit financial

Private credit is a form of borrowing where companies or organizations obtain loans directly from private lenders rather than traditional banks or financial markets. It often involves customized financing arrangements that are not traded publicly, making it a way for businesses to access funding outside of standard channels. For investors, private credit offers the potential for higher returns, but typically comes with increased risk and less liquidity compared to more conventional investments.

Schwab clients were enthusiastic buyers in February; STAX has now outgained the S&P 500® index (SPX) in six of the last seven months.

WESTLAKE, Texas--(BUSINESS WIRE)-- The Schwab Trading Activity Index™ (STAX) increased to 57.32 in February, up from its score of 49.96 in January. The only index of its kind, the STAX is a proprietary, behavior-based index that analyzes retail investor stock positions and trading activity from Schwab’s millions of client accounts to illuminate what investors were actually doing and how they were positioned in the markets each month.

“February’s score represented the biggest month-over-month percentage gain since late 2020, and the highest score we’ve seen since February 2022,” said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab. “The trading behavior we saw among our retail clients tells a clear story: the AI-driven panic that rattled the markets in February was likely overblown and, more than anything, may have represented an opportune time to pick up some names that had taken a perhaps unfair beating.”

In February, the S&P 500 Index struggled and failed to regain its January highs, generally trading in a tight range between 6,800 and 7,000 most of the month before conflict with Iran began in early March. Volatility rose in February, partly due to geopolitical concerns.

In addition, markets suffered slings and arrows throughout February stemming from worries about AI competition for functions currently performed by software firms, sending shares of that technology sub-sector to 25% losses year-to-date by the end of the month. Financial names were hurt by AI substitution worries, too, along with concerns about private credit liquidity due to private asset management firms’ large positions in software.

The fourth quarter earnings season rolled along with mostly positive numbers, and by the end of February, 97% of S&P 500 companies had reported. Earnings growth was 14.2% year over year, according to FactSet, well above expectations of about 8%.

Economic data in February was mixed. Fourth quarter gross domestic product (GDP) growth came in well below estimates, but January jobs growth of 130,000 easily topped consensus.

More affluent and older investors led the buying among Schwab clients last month, with Generation X, born between 1965 and 1980, topping the list of age groups. Popular names bought by all Schwab clients during the period included:

• Amazon.com Inc. (AMZN)
• Microsoft Corp. (MSFT)
• NVIDIA Corp. (NVDA)
• Palantir Technologies Inc. (PLTR)
• Netflix Inc. (NFLX)

Names net sold by Schwab clients during the period included:

• Meta Platforms Inc. (META)
• Apple Inc. (AAPL)
• Verizon Communications Inc. (VZ)
• Costco Wholesale Corp. (COST)
• AT&T Inc. (T)

About the STAX

The STAX value is calculated based on a complex proprietary formula. Each month, Schwab pulls a sample from its client base of millions 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.

For more information on the Schwab Trading Activity Index, please visit www.schwab.com/investment-research/stax. Additionally, Schwab clients can chart the STAX using the symbol $STAX in either the thinkorswim^® or thinkorswim Mobile platforms.

Investing involves risk, including loss of principal. Past performance is no guarantee of future results.

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision.

The STAX is not a tradable index. The STAX should not be used as an indicator or predictor of future client trading volume or financial performance for Schwab.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at aboutschwab.com. Follow us on X, Facebook, YouTube, and LinkedIn.

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At the Company

Margaret Farrell

Director, Corporate Communications

(203) 434-2240

margaret.farrell@schwab.com

Source: The Charles Schwab Corporation