Retail investors were less bullish in August
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Retail investors were less eager buyers of stocks in August, taking advantage of gains early in the month to trim some of their positions and leading to a 3.9% decline in Charles Schwab's index of stock positions and trading activity, per data shared exclusively with Axios.
Why it matters: That caution, seen during a month of rising Treasury yields and surging energy prices, may indicate a willingness to tap the brakes on this long-running bull market.
What they're saying: Investors' hesitation is reflected in the growing trend of putting money into exchange-traded funds, or ETFs, instead of single stocks, says Joe Mazzola, head trading and derivatives strategist at Schwab.
- There's a "momentum shift toward diversified ETFs," he notes, with four ETFs among the top 10 net buys among Schwab clients.
- In addition, of the 11 sectors in the S&P 500, its investors were net buyers of only industrials, utilities and real estate — all typically defensive investments.
Zoom in: Among single-stock names, Elon Musk's SpaceX was "hands down the favorite" among retail clients in August, Mazzola says.
- Other top net buys were: Micron, Nvidia, Intel and Alphabet.
- Investors were net sellers in other Big Tech companies: Palantir Technologies, Microsoft, ServiceNow, Salesforce and Oracle.
By the numbers: The Schwab Trading Activity Index, or STAX, declined to 57.50 in August from a four-year high of 59.80 in July.
- The STAX index is calculated by examining the stock positions and trading activity of the millions of Schwab customer accounts.
What we're watching: Schwab clients said they were a bit more bullish about stocks going into September, a separate attitudinal survey found.
- Clients are "defensive, but are not meaningfully pessimistic," Mazzola says.
- Investors were the most bullish about energy stocks, reflecting in part, Schwab says, interest in AI's energy needs.
