Schwab: Retail investors went all-in with Big Tech stocks in October

It appears the tech industry has won back the hearts of retail investors.

After selling off tech stocks in high numbers since December, investors ramped up their investments in Silicon Valley giants in October, according to the latest Schwab Trading Activity Index (STAX).

The top five stocks on a net-buy basis were Nvidia (NVDA), Meta (META), Microsoft (MSFT), Amazon (AMZN) and Palantir (PLTR). Palantir is the only one of these that’s not a member of the so-called Magnificent Seven tech stocks.

It was the fifth straight month that STAX was in positive territory, but it took a “last-minute flurry of trading activity” in order for it to get there, according to Schwab.

The index entered the last week of the month down from its September close, but investors began buying up large numbers of shares in Nvidia, Meta and Amazon.

The latter two both beat analyst’s expectations for their third-quarter earnings.

STAX outpaced the S&P 500 for the third-straight month, rising to 4.34%, versus 2.96% for the S&P.

It is the first time that STAX has outgained the S&P for three straight months in a four month period since a four month period ending in March 2021.

"Bullish sentiment continues to rise among Schwab investors," Joe Mazzola, head trading and derivatives strategist at Schwab, said in a statement.

"People are saying they're cautious, but the market continues to go up even as stocks grow more expensive."

STAX rose to 48.12 in October, up from 46.12 in September. It was the best finish for the index since 48.36 in March.

However, Schwab notes that STAX was positive for just two of the five weeks that were tracked, falling for three weeks in a row between the weeks ending October 10 through October 24.

Gen X were very active in October

A new addition to the report was Schwab tracking the trading activity by age group, finding that the most aggressive investors in October were those from “Generation X,” which are people born between 1965 and 1980.

The least active were "Generation Z” which are those born between 1997 and 2012.

The stocks with the most net-selling in October were AMD (AMD), Apple (AAPL), Tesla (TSLA), Eli Lilly (LLY) and Intel (INTC).

Interestingly, the top five buys and the top five sells were mostly stocks that rallied during the month. The one outlier was Meta, which dropped double digits in October.

"Clients were heavy buyers of Meta on the dip," Mazzola said. "The final week of the month saw a major jump in bullish sentiment and activity that pulled up the entire segment for the month."

CoreWeave (CRWV), Bitmine (BMNR), SoFi technologies (SOFI) and Rigetti Computing (RGTI) were all popular buys for the second straight month.

Schwab notes that this could reflect “continued participation in the momentum trades that had, for the most part, been successful the prior month.”

Volatility ticked up in October, with the Cboe Volatility Index (VIX) hitting 29 in the middle of the month, which was up from recent lows of 15 in September.

This was likely due to the recent bankruptcies that roiled the private credit market.