STAX Generational Trends: Gen X Pulls Back

Even as major indexes posted gains in August, conflict in the Middle East, elevated oil prices, and rising Treasury yields led investors to take a slightly more cautious approach. The Schwab Trading Activity Index™ (STAX)—which analyzes Schwab client activity to gauge investor sentiment—retreated from July's four-year high, sinking 3.85% to 57.5.

Every generation's STAX score dropped in August as many clients took profits from positions bought during July's market pullback. Even the typically bullish Gen X (born 1965 to 1980) saw their STAX score decline 4% to 65.49.

"While still the highest among the tracked generations, Gen X's STAX score fell to its lowest since May, ending a three-month bullish run," noted Joe Mazzola, head trading and derivatives strategist at Schwab. "One month doesn't signal a major change in sentiment, but this is something to monitor, as typical seasonality trends emerge and the upcoming midterm elections could add to the recent increase in volatility."

Client trading activity was volatile in August. The STAX dropped sharply at the start of the month when investors received news that the U.S. economy unexpectedly lost 23,000 jobs in July, then recovered after Nvidia's (NVDA) strong earnings report.

Millennials' (born 1981 to 1996) STAX score sank 3.7% to 56.84 amid the volatile trading, while Baby Boomers' (born 1946 to 1964) dropped 3.6% to 57.79. The Silent Generation (born before 1946) saw their STAX score drop 2.2% to 55.66 as well.

Gen Z (born 1997 to 2012) and Gen Alpha (born 2013 to 2024) remained the most bearish generations, with their STAX scores falling 3.6% to 46.60 and 2.5% to 47.98, respectively. (Note: A significant portion of Gen Alpha's trading is likely done by guardians, who could be more risk-averse with their dependents' money.)

Looking at STAX scores by assets under management, ultra-wealthy clients remained by far the biggest net buyers. Their STAX scores were largely steady last month, while clients with fewer assets retreated in terms of buying activity. 

Clients with assets between $10,000 and $100,000, for example, saw their STAX score drop 4.7% to 60.65, while the score of clients with $2,000 to $10,000 plummeted 7.3% to 59.30.

Clients in the middle of the pack in terms of assets remained more cautious than the rest, but their STAX scores were less volatile. The score of clients with assets between $100,000 and $500,000 fell 3% to 56.23, while the score for those with $500,000 to $1 million edged down just 2.1% to 52.03. Finally, those with between $1 million and $5 million barely changed their approach, posting a STAX score of 51.89, down just 1.1% from July.