Clients were net buyers and increased overall market exposure in July, with the strongest buying interest in the Information Technology and Communication Services sectors

The Investor Movement Index^® (IMX^SM) increased to 5.53 in July, up slightly from its score of 5.46 in June. 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 July 28, 2023 ranks “moderate low” compared to historic averages.

“Retail clients increased their exposure to the markets to a modest degree in July,” said Joe Mazzola, Director of Trading and Education at Charles Schwab. “We saw net buying of equities overall but somewhat paradoxically, our clients were net sellers of all but two S&P 500 sectors - Information Technology and Communication Services. The strongest selling interest was in Financials, Industrials, and Energy.”

Markets had several geopolitical events and a great deal of economic news to digest during the July IMX period. The Federal Reserve announced an additional quarter-point hike in interest rates and Chairman Jay Powell remarked that the odds of achieving a so-called “soft-landing” have improved, reducing the risk of a recession. The Employment Situation Summary issued at the beginning of the month reflected a 0.1 percentage point decrease in the unemployment rate to 3.6%. Nonfarm payrolls added 209,000 jobs. The July Consumer Price Index (CPI) was released the morning of July 12th, and rose 0.2%. The all items index rose 3% for the 12 months ending in June. Shelter, vehicle insurance, and food indices reflected the largest increases, while the indexes for airline fares, communications, and used vehicle sales all declined. Trading in equity markets was mixed after the report was released.

The latter part of the July IMX period was characterized by a continuation of the rally in the stock market, led by the Dow Jones Industrial Average ($DJIA), which posted a 13-day winning streak, matching its longest since 1987. The S&P 500 Index ($SPX) rose 2.96% and the Nasdaq 100 Index ($NDX) rose 3.77%. The CBOE Market Volatility Index (VIX) fell 1.91% during the July period closing at 13.33, signaling acceptance of the bull market in equities. The yield on the 10-Year Treasury Note rose to 3.96%. The US Dollar Index (DXY) fell slightly during the period, closing at 101.62 as currency pressures continued to ease. Front month WTI Crude Oil futures rose sharply during the period, closing at $80.58 on the back of industry data, pointing to both a drop in inventories as well as increased demand.

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

• AT&T Inc. (T)
• Verizon Communications Inc. (VZ)
• Rivian Automotive Inc. (RIVN)
• Lucid Group Inc. (LCID)
• Walt Disney Co. (DIS)

Names net sold during the period included:

• Carnival Corp. (CCL)
• American Airlines Group Inc. (AAL)
• Coinbase Global Inc. (COIN)
• Ford Motor Co. (F)
• Warner Bros Discovery Inc. (WBD)

Millennial Buys & Sells

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

The overall TD Ameritrade client population and TD Ameritrade millennial clients were net buyers of telecom giants AT&T (T) and Verizon (VZ). Both have underperformed the broader market so far in 2023 and most recently sold off amid reports of possible toxic lead exposure from their aging underground cables. Investors may view the sell-off as overdone, and while AT&T did post an earnings beat late in July, both companies may still be in need of a catalyst to fully rebound from recent five-year lows. Electric vehicle (EV) makers captured traders’ interest once again during the July IMX period, with notable buying in Rivian Automotive (RIVN), which reached a short-term bottom during the period and bounced sharply, perhaps attributable, in part, to years-long back orders beginning to finally hit the road.

TD Ameritrade millennial clients sold stakes in Carnival Cruise Lines (CCL), American Airlines (AAL), and Delta Airlines (DAL) during the July IMX period; names associated with leisure or discretionary travel. Earlier in 2023, recession fears and outages related to aging travel industry logistics systems created a perfect storm for a sell-off, and each of these companies may be mounting a comeback. While Carnival and Delta are beneficiaries of recent analyst upgrades and mounted impressive monthly and year-to-date rallies, it is unclear if American Airlines is headed for blue skies ahead as it remains in a multi-year downtrend despite strong gains in July. Analysts cite several years of pent-up demand as a major catalyst that will likely take some time to work through, creating an imbalance that allows operators to command higher prices.

Looking at S&P 500 sectors, TD Ameritrade millennial clients bought most heavily in Information Technology, Communication Services, and Health Care while selling was most pronounced in the Financials, Energy, and Materials sectors.

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 July 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

TD Ameritrade provides investing services and education to self-directed investors and registered investment advisors. A leader in U.S. retail trading, we leverage the latest in cutting-edge technologies and one-on-one client care to help our clients stay on top of market trends. Learn more by visiting www.tdameritrade.com.

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