Charles Schwab clients turn cautious, war causes trading index to decline

Investing.com – As war between Iran breaks out, Charles Schwab clients turned slightly bearish in March, with the Charles Schwab Trading Activity Index (STAX) falling 2.23% from February’s long-term peak to 56.04.

This decline marks STAX’s biggest monthly drop since a 3.64% fall in May 2025, when the market was grappling with President Trump’s first round of tariffs. The March reading still represents the highest level of any recent month, aside from February.

As the market pulled back, Charles Schwab clients appeared to spend less time picking individual stocks and instead focused on diversified exchange-traded funds. Among the top 10 most net-bought holdings by clients in March, 5 were ETFs rather than individual stocks.

Joe Mazzola, head of Charles Schwab’s trading and derivatives strategy, said: “Investors weren’t trying to identify specific standout opportunities, but rather took a broader, more diversified approach and sought to spread risk by investing in more diversified exchange-traded funds.”

The S&P 500 index fell more than 7% during March through March 27. This was STAX’s largest monthly decline during the period since the index fell more than 11% in September 2022.

Nvidia topped the net-buy list for March, ahead of February’s third-place finish. Clients tried to find a bottom as the stock tested its 200-day moving average and approached its long-term support level near $170. On the final day of the STAX period, that level was broken, and Nvidia closed at nearly $167.

Microsoft ranked second in March, after leading the list in January. The stock fell 10% during the STAX period and is down 25% year to date.

After being absent from the list in February, Tesla returned to the top five net-bought stocks. The stock slid to the support level it previously had near $380, attracting some clients in the second half of March, but it then continued lower to slightly above $360.

Micron Technology ranked fourth; it hit a record high above $471 in March before dropping 30% on concerns about AI competition.

After topping the net-buy list in February, Amazon returned to the net-buy list in March.

Broadcom was the individual stock with the largest net sell in March’s STAX period. After reaching a peak above $400 in late last year, the stock fell sharply to roughly $300 by the end of the period.

Netflix ranked second for net selling in March after topping the net-buy list in February.

The Federal Reserve held a meeting in March and, following three rate cuts at the end of last year that brought the target range for the federal funds rate down to between 3.5% and 3.75%, kept rates unchanged for the second consecutive meeting.

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