Tech stocks remain popular as Schwab reports clients making ‘thoughtful’ buys
The firm's trading activity index shows equities in favor despite uncertain data.
Retail investors remained firmly in favor of tech stocks last month, according to the latest Schwab Trading Activity Index.
As markets soared to all-time highs, the analysis of the firm’s millions of accounts reveals an 8% increase in trading activity to a STAX score of 51.65 in March compared to 47.65 in February. This is a “moderate” ranking when compared to the index’s historic averages but is the highest since May 2022.
The increased activity was despite uncertainties around several economic factors including interest rates, inflation, and the potential for recession. Investors instead focused on the buoyant market.
“Despite the market highs, however, Schwab clients remain in the moderate range of market exposure as measured by the STAX,” said Joe Mazzola, Charles Schwab’s director of trading and education. “They net bought equities in March, but we continue to see that retail investors are engaging in strategic, thoughtful buying. There’s palpable enthusiasm when it comes to names related to technology, for example, but clients also found areas to moderate and trim exposure.”
High on investors’ equities shopping lists were some of the best known technology firms:
- NVIDIA Corp. (NVDA)
- Tesla Inc. (TSLA)
- Apple Inc. (AAPL)
- Advanced Micro Devices Inc. (AMD)
- Palo Alto Networks Inc. (PANW)
While the following names were net sold during the month:
- Coinbase Global Inc. (COIN)
- Walt Disney Co. (DIS)
- PayPal Holdings Inc. (PYPL)
- Block Inc. (SQ)
- Netflix Inc. (NFLX)
BULLISH SENTIMENT
Investors’ bullish sentiment remained above average for the 22nd consecutive week, according to the AAII Sentiment Survey last week.
Despite a 2.7 percentage point decrease from the previous week, the bullishness score – reflecting respondents who expect stock prices to rise over the next six months – was 47.3%, well above the 37.5% historical average.
The bearish score – reflecting those respondents who expect lower stock prices over the next six months – was down 0.2 percentage points to 22.2% and was below its historical average of 31% for the 22nd straight week.
Meanwhile, the neutral score gained 2.9 points – reflecting a rise in those who are expecting stock prices to be essentially unchanged over the next six months – although this was below its 31.5% historical average.
Most investors (around 39% each) felt that stocks are either overvalued or a mixture, with some overvalued and some cheap.
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