Clients returned to net buying equities in February, with the strongest buying interest in the Communication Services and Consumer Discretionary sectors

The Investor Movement Index^® (IMX℠) increased to 4.57 in February, up from its score of 4.31 in January. The IMX is TD Ameritrade’s proprietary, behavior-based index, aggregating Main Street investor positions and activity to measure what investors actually were doing and how they were positioned in the markets.

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The reading for the four-week period ending February 24, 2023 ranks “moderate low” compared to historic averages.

“For the first time since September ’22, TD Ameritrade clients were net buyers of equities,” said Shawn Cruz, head trading strategist, TD Ameritrade. “Inflation continues to be a persistent concern, as does market volatility and rising yields. But the IMX data suggests our clients saw the market weakness during the period as an opportunity to pick up individual names and, in doing so, increase overall exposure.”

The February IMX period included both macroeconomic catalysts and the bulk of the latest quarterly earnings season. The month began with a strong rally in U.S. equities following the Federal Reserve’s Federal Open Market Committee (FOMC) meeting, which concluded with a 25-basis point increase in the Federal Funds Rate and commentary from Fed Chair Jerome Powell that was not as hawkish as many had feared. However, the Bureau of Labor Statistics’ Employment Situation report showed continued strong jobs growth and the unemployment rate edged lower to 3.4%, its lowest level since 1969. This data reignited inflation concerns, leading the S&P 500 onto a downward trajectory that it maintained for the duration of the February period.

The Consumer Price Index (CPI) and Producer Price Index (PPI) readings for February failed to ease those concerns, with both reports showing hotter-than-expected inflation rates. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index component of the Personal Income and Outlays report, also showed prices increasing at a faster-than-anticipated rate. Market participants wrestled with the prospect of higher rates for a longer duration as the Fed continues its efforts to restore price stability. The S&P 500 ended at 3,970.04, a decline of only 2.47% from the beginning of the February period but a fall of over 5% from the high close for February of 4179.76 on 2/2. This weakness was underscored by a higher CBOE Market Volatility Index (VIX), which ended the period at 21.67, a historically elevated level. Steep selling in the U.S. Treasury markets during the period resulted in higher yields, which in turn served as a primary driver of the weakness we saw in equities.

TD Ameritrade clients were net buyers during the period. Popular names bought included:

• Tesla Inc. (TSLA)
• Microsoft Corp. (MSFT)
• Alphabet Inc. (GOOGL / GOOG)
• Amazon.com Inc. (AMZN)
• 3M Co. (MMM)

Names net sold during the period included:

• Meta Platforms Inc. (META)
• Netflix Inc. (NFLX)
• Warner Bros. Discovery Inc. (WBD)
• NVIDIA Corp. (NVDA)
• Apple Inc. (AAPL)

Millennial Buys & Sells

TD Ameritrade millennial clients increased exposure during the February period, and like the overall TD Ameritrade client population they were net buyers of equities.

Both TD Ameritrade millennial clients and the overall TD Ameritrade client population were net buyers of Tesla (TSLA) as the electric vehicle (EV) maker rallied over 10% despite recalling over 360,000 vehicles during the period due to a software issue. TD Ameritrade millennial clients appeared to find opportunity to buy into weakness in Rivian (RIVN) as the EV maker slid over 12% during the period on concerns surrounding the company’s path to profitability.

Both populations were net sellers of streaming giant Netflix (NFLX) as the company sunk over 12% after announcing it had cut prices in some markets amid rising competition. Both populations also sold media and entertainment company Warner Bros. Discovery (WBD) as the company finished up over 4% during the period, despite disappointing quarterly earnings, on the heels of a strong launch of its Hogwarts Legacy video game. Airbnb (ABNB) posted solid quarterly earnings, beating street expectations on both the top and the bottom lines. The stock surged and TD Ameritrade millennial clients appeared to see this strength as an opportunity to reduce exposure in the travel name.

TD Ameritrade millennial clients were net buyers in all but three of the S&P sectors: Consumer Discretionary, Financials, and Information Technology.

About the IMX

The IMX value is calculated based on a complex proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of funded accounts, which includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX.

For more information on the Investor Movement Index, including historical IMX data going back to January 2010, to view the full report from February 2023, or to sign up for future IMX news alerts, please visit www.tdameritrade.com/IMX. Additionally, TD Ameritrade clients can chart the IMX using the symbol $IMX in either the thinkorswim^® or thinkorswim Mobile platforms.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold. All investments involve risk including the possible loss of principal. Please consider all risks and objectives before investing.

Past performance of a security, strategy, or index is no guarantee of future results or investment success.

Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision.

The IMX is not a tradable index. The IMX should not be used as an indicator or predictor of future client trading volume or financial performance for TD Ameritrade. IMX data includes that from accounts of TD Ameritrade clients which recently transferred to our affiliate, Charles Schwab & Co., Inc., as part of our planned integration.

About TD Ameritrade

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