September 2026 STAX: ETFs, SPCX, NVDA Lead Buys as Diversification Move Stocks

SPEAKER_1 (0:00)

Joining us now to take a closer look is Joe Mazzola, Head Trading Strategist over at Charles Schwab. Joe, always appreciate you joining us when the Stacks Report comes out. I mean, some really fascinating details to unpack here in the September report. We saw the Stacks rising to 58.92 in September, but the S&P 500 barely moved. So what does that tell you about the divergence between how, about how Schwab clients are positioning themselves beneath the surface?

Joe Mazzola (0:32)

Yeah, I think it's exactly what the report says is that there is some movement, some churn below the surface, specifically in this report that we hadn't really seen in some other ones. I'll give you a perfect example, Marlee. Normally, when we look at our top five buys and sells, there's a single stock at the list. Sometimes that's been SpaceX, sometimes that's been Nvidia. If you look over the last few years, it tends to be one of those two or even Tesla is usually one of those names. This time, it was actually an ETF, and that which speaks to what we saw over the course of September, and that was basically clients wanted to participate in the market, but they wanted to diversify out of some of that idiosyncratic risk.

So five of the top 10 buys overall were ETFs, and within one of those ETFs, that actually happened to be a short-term bond ETF. These are things that we haven't grown accustomed to seeing, really, from our kind of stock picker type crowd that we tend to have, especially with our trader crowd here at Charles Schwab. And I think what's interesting is it really shows that there's some confusion, maybe, as we kind of head into the fall cycle here around where the leaders, where the winners are going to be.

You mentioned that seven of the 11 sectors saw net inflows or net buys, and that was definitely true, but I think a lot of that had to do with the fact that a lot of that money flowed into ETFs as opposed to single stocks.

SPEAKER_1 (2:03)

That was one of the most fascinating parts for me, for sure, that since the first time, since the stacks began in 2019, it was the first time ever we had an ETF on top of the list. And you mentioned it's actually 50 percent of the top 10 buys. Five of them are ETFs. So clearly, there's this desire for diversification, as you mentioned, because there seems to be some confusion or some uncertainty about what our backdrop looks like as we head into the final stretch of the year here.

There's some selective risk taking, it appears. As you look over this meaningful shift towards diversification, what does it appear clients are willing to own right now? And what does it appear they're staying away from?

Joe Mazzola (2:45)

It's a great question, Marlee, because what we saw specifically, let me start on the buy side. The top three equity buys were actually SpaceX, Amazon and Broadcom.

SpaceX has been interesting because basically since it went public, it's been number one on this list. So that goes back to June. Amazon has been in the second or third position these last couple months. Broadcom has been a little bit back and forth. And I think if you look at the Broadcom story, they had earnings during that cycle.

Beat earnings, beat guidance. But the stock wasn't rewarded nearly as much as maybe you saw from Nvidia. Just because I think the stakes were, or at least the bar was set pretty high for the chip sector. If you look at the stocks that were sold, these three really interest me because they all speak to a similar story. Whether it's Meta, whether it's AMD or Intel, all of them were up around 30 to 40% during the Stacks period. So it goes to show that investors were trimming some of those gains, especially these are pretty substantial gains within a one month period. And it does kind of show that they were willing to get out of some of those winners to a certain extent, rotate that into maybe some of the sectors that hadn't performed or some of the stocks that hadn't performed, or as we talked about a little bit more that diversification from the ETF side. On top of that, the other thing I would add to that, Marlee, that I found interesting, is once again from the options markets, or at least from the standpoint that we're seeing with our clients, there seems to be a trend that's been forming over the last couple of months. A lot of put selling within the semiconductor memory chip stock names, and some upside call buying in some of the more of the ETF. So like I said, whether they're buying the ETFs or buying calls on the ETFs, they're participating in the more diversified manner.