Schwab: Investors remain bullish, yet cautious
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Stocks rallied like gangbusters in May, so it's perhaps not surprising that retail investors were net buyers of stocks for the month, new data from Charles Schwab shared exclusively with Axios shows. Yet investors also showed some caginess.
Why it matters: Investors remain bullish amid an AI-fueled rally that has lifted the S&P 500 and Nasdaq indexes to new highs, even as they may be seeking to limit their risk.
What they're saying: Many investors rotated out of individual stocks into diversified exchange-traded funds, which "suggests a degree of caution remained," says Joe Mazzola, head trading and derivatives strategist at Charles Schwab.
- A separate attitudinal survey conducted by Schwab showed that 36% of clients are preferring ETFs over individual stocks. "That's really a shift," Mazzola says.
- Three of the 10 most bought individual names in May were ETFs.
- Another sign that investors were hedging their bets was with the growing use of options, in particular selling puts on tech stocks, during May.
By the numbers: The Schwab Trading Index, or STAX, rose to 55.08 in May, from 50.10 in April, although it was still below levels reached in March and February.
- Schwab calculates the STAX score by examining the stock positions and trading activity of millions of its customer accounts.
What to watch: The attitudinal survey found that geopolitical risk is the main worry for investors right now — and possibly more so after this weekend's events showed how fragile the ceasefire in the Middle East is.
- 73% of Schwab clients said geopolitical developments were among their top three concerns, with 42% saying it was their No. 1 issue.
