Charles Schwab’s (SCHW) top trading strategist, Joe Mazzola, pointed out a clear difference between how big institutions and retail investors are behaving in the market right now. More precisely, large institutional investors are playing it safe by protecting themselves from potential losses, while retail investors remain optimistic, especially when it comes to tech stocks. Mazzola noted that equity call options, which are bets that stocks will go up, are mostly driven by retail traders, which shows that they believe the market still has room to rise.
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Mazzola also explained where retail investors are putting their money. Sectors such as energy (XLE), communication services (XLC), and consumer discretionary (XLY) are attracting new investments, while healthcare (XLV) is also receiving more attention. He added that Schwab clients often buy major stocks, such as Tesla (TSLA) and Amazon (AMZN), whenever prices dip.
Looking ahead, earnings season will be a key moment for the market, as it is the first quarter that will fully reflect the impact of new tariffs. Interestingly, though, analysts have raised their expectations rather than lowering them. Mazzola said that the market is now expecting around 9% growth compared to last year. However, there is still some nervousness among investors due to a lack of fresh government economic data, which usually helps set the tone before earnings reports.
Is SCHW Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SCHW stock based on 16 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average SCHW price target of $113.29 per share implies 20.2% upside potential.
