The Investor Movement Index® (IMXSM) decreased to 4.68 in July, down from 5.10 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.
The reading for the four-week period ending July 29, 2022 ranks “Moderate Low” compared to historic averages.
“Despite a strong finish at the end of the month, the markets were volatile in the face of macroeconomic concerns in July and TD Ameritrade clients continued reducing exposure as a result,” said Shawn Cruz, head trading strategist, TD Ameritrade.
“While there’s a good case for optimism – in particular, we saw corporate earnings by and large avoid any anticipated ‘worst case’ scenarios – the looming threat of inflation and a possible recession has retail investors taking a serious look at their tolerance for risk and in many cases, demonstrating a preference for established names with strong underlying fundamentals.”
The July IMX period was once again characterized by elevated volatility. Building on its strong finish in June, the S&P 500 closed out July up 218.55 points, or +5.59%. It was a busy month on the macroeconomic front, starting with disappointing Personal Spending figures that were accompanied by a Core Personal Consumption Expenditures (PCE) Price Index number that showed signs of cooling inflation.
The 10 Year Treasury yield plunged below 3% in response. The July Employment Situation data from the Bureau of Labor Statistics (BLS) pointed to a resilient job market, sparking optimism until hotter-than-expected inflation data in the June Consumer Price Index (CPI) and Producer Price Index (PPI) reports reignited concerns.
Ultimately, the Federal Reserve voted to raise the Fed Funds Rate by another 75 bps to 2.25%-2.5%, which alongside Chairman Powell’s statements during the subsequent press conference resulted in strong buying pressure.
Corporate earnings struck a more optimistic note, but the most notable move of the period was the sharp drop in the 10 year treasury yield, which finished nearly 50 bps lower than at the end of June.
Despite overall reduced investment exposure, TD Ameritrade clients were net buyers of equities in July. Some of the popular equity names bought during the period were:
- Advanced Micro Devices Inc. (AMD)
- NVIDIA Corp. (NVDA)
- Shopify Inc. (SHOP)
- Amazon Inc. (AMZN)
- Alphabet Inc. (GOOG/GOOGL)
Names sold during the period included:
- Tesla Inc. (TSLA)
- Nio Inc. (NIO)
- Twitter Inc. (TWTR)
- Exxon Mobil Corp. (XOM)
- Netflix Inc. (NFLX)
Millennial Buys & Sells
TD Ameritrade millennial clients reduced exposure during the July period, and unlike the general client population, they were net sellers of equities overall.
Both TD Ameritrade millennial clients and the overall TD Ameritrade client population favored Amazon (AMZN) for the second month in a row, as the Consumer Discretionary giant’s recent stock split led to a sustained increase in interest in the July period.
July was a period of strong performance for semiconductor giants NVIDIA (NVDA) and Advanced Micro Devices (AMD), and TD Ameritrade millennial clients mirrored the overall TD Ameritrade client population in net buying the two companies.
Apple (AAPL) beat top and bottom line expectations with its quarterly earnings reporting and the company provided an optimistic forecast for the rest of the year, making it a top buy among TD Ameritrade millennial clients, though not among the general client population.
Despite being net sellers of equities overall, TD Ameritrade millennial clients were net buyers of four of the S&P sectors: Communication Services, Energy, Health Care, and Materials.
TD Ameritrade millennial clients, like the overall TD Ameritrade client population, were net sellers of electric vehicle makers Tesla (TSLA) and Nio (NIO). Unlike the overall client population, however, TD Ameritrade millennial clients were net sellers of Cenntro Electric Group (CENN).
Like the overall TD Ameritrade client population, TD Ameritrade millennial clients were net sellers of Twitter (TWTR) during the July period as the stock rallied despite uncertainty surrounding the potential purchase of the company by Elon Musk.