February 22, 2024

S&P 500: Schwab Investors Pile Into 5 Stocks And Bail Out On Another 5

Schwab investors are snatching up S&P 500 stocks. But they’re being extra choosy.


Account holders at the massive brokerage were net buyers of Tesla (TSLA), Nvidia (NVDA) and Amazon.com (AMZN) in January, says new data from Charles Schwab (SCHW). And at the same time, they unloaded shares of Bank of America (BAC), Walmart (WMT) and General Motors (GM).

Rampant buying highlights how individual investors continue to jump into markets despite reports of swelling money-market balances. Big buying in January comes following the December 2023 Schwab Monthly Activity Report, which showed cash as a percent of client assets at only 10.7%. That’s actually lower than it was in Dec. 2022. Also lower than in 2019 and 2020.

“Schwab’s clients were net buyers of equities in January,” said Joe Mazzola, director of Trading and Education at Schwab. “Our clients stayed in step with the market rally, finding opportunities to increase exposure in particular to the ‘Magnificent Seven’ companies as the new year began.”

Stepping Up And Buying Tesla

Perhaps the biggest surprise is that investors stepped up to buy Tesla in January. Shares of the electric vehicle maker sank 27% this year so far following disappointing fourth-quarter results.

Schwab investors seem willing to bet Tesla’s woes are short term. Analysts think the company’s profit will rise just 2.5% this year. But they’re calling for a38% jump in adjusted profit in 2025.

And yet, Tesla is the only S&P 500 stock Schwab investors were net buyers of that’s down this year so far. The remainder are up, and by large amounts in some cases.

Nvidia was another big buy by Schwab investors. And shares of the AI giant are up 38% this year. And talk about a blowout business. Analysts think the designer of AI computer chips will boost its adjusted profit per share by nearly 269% this year. And next year? Analyst see another 66% pop in profit.

Bailing Out On BofA

Investors don’t seem to have much patience for stocks that aren’t working. They’re bailing out on some of them.

Bank of America is a stock Schwab investors are selling off. Shares are only down 2% this year so far. And profit per share is expected to grow annually until 2027. That includes a projected 2% rise in profit this year.

But it’s not just decliners that Schwab investors are selling. They’re also net sellers of Walmart. That’s despite the stock gaining 7.3% this year. In some ways the retailer’s stock is making up for lost time. It only rose 6.8% last year, trailing the S&P 500.

But the company’s profit is only expected to rise 3% in 2024. Why mess around with that when you can jump on the AI bandwagon?

Top S&P 500 Buys And Sells In January

By Charles Schwab clients

CompanySymbolYear-to-date % ch.January net tradeSector
Nvidia (NVDA)38.3%BuyInformation Technology
Advanced Micro Devices (AMD)17.7%BuyInformation Technology
Amazon.com (AMZN)11.8%BuyConsumer Discretionary
Microsoft (MSFT)7.7%BuyInformation Technology
Tesla (TSLA)-27.4%BuyConsumer Discretionary
Carnival (CCL)-14.9%SellConsumer Discretionary
Warner Bros. Discovery (WBD)-11.0%SellCommunication Services
Bank of America (BAC)-2.0%SellFinancials
General Motors (GM)5.6%SellConsumer Discretionary
Walmart (WMT)7.3%SellConsumer Staples
Source: Charles Schwab

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