Investors who click on the Charles Schwab (SCHW) stock chart will notice its rise in 2020. Between 2020-2022, the discount brokerage stock rose from the $30s to as high as $86.63. The pandemic fueled a new generation of traders. The post-pandemic slump will discourage those traders from investing.
The lockdown encouraged speculators to trade heavily on stocks. Money flooded the stock markets and the economy. Low interest rates loosened credit conditions. Today, the reverse is true. High interest rates, a tightening money supply, and an economic slowdown will hurt stocks.
Schwab clients are moving their cash into sweep accounts that pay around 4.5% in interest. The Schwab purchased money fund pays up to 4.84% for investments of at least $1 million. Schwab’s net interest income margin shrinks when its customers buy SWVXX and SNAXX money funds.
JP Morgan (JPM) and Bank of America (BAC) benefit when the media scares the public about Schwab’s safety. Schwab countered the negative news by announcing an over $53 billion net new client asset increase in March 2023.
Wait Until April 17, 2023
Schwab will report quarterly results on April 17. Investors should not commit to a position until then. Last week, SCHW stock broke down, falling below $50. It is worth waiting for good news before buying the stock.
