- **Q: Why is Charles Schwab stock performing well despite market downturns?
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ARTICLE DETAIL
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Investing / Stocks
Charles Schwab Stock: Trading Up in a Down Market
Amidst broader market declines plagued by recession worries and tariff fears, The Charles Schwab Corporation (NYSE: SCHW) stands out. While the S&P 500 has seen losses, SCHW stock has demonstrated notable resilience, posting year-to-date ga...
Key Insights
- **Market Resilience:** SCHW stock traded up 5.1% year-to-date (as of March 28, 2025, per source) while the S&P 500 was down 5.2%.
- **Strong Financials:** Reported Q4 2024 EPS of $1.01 (beating estimates by 10 cents) on revenues of $5.33 billion (up 19.5% YoY).
- **Asset Growth:** Added $115 billion in core net new assets in Q4 2024, totaling $367 billion for the year. February 2025 saw core net new assets rise nearly 44% YoY to $48.04 billion.
- **Expanded Trading:** Rolled out 24-hour trading (5 days a week) on select stocks and ETFs to all customers via its ThinkorSwim platform.
- **TD Bank Stake Sale:** Toronto-Dominion Bank sold its remaining stake in SCHW, acquired during the TD Ameritrade purchase, while Schwab bought back a portion of these shares.
- **Why this matters:** Schwab's ability to attract assets, grow revenue, and innovate its services even in challenging market conditions signals underlying strength and investor confidence, potentially positioning it for further growth.
In-Depth Analysis
Charles Schwab has successfully transitioned from a discount broker to a financial services giant, managing over $10 trillion in assets. Its recent performance is particularly noteworthy given the market backdrop. The company's solid winter business update highlighted exceptional revenue growth (19.5% YoY) and a significant beat on earnings per share, driven by substantial net new asset inflows.
The introduction of 24-hour trading on select equities and ETFs caters to evolving investor demands for flexibility, potentially increasing engagement and volume over time, although overnight markets typically have lower liquidity. James Kostulias, Schwab's head of trading services, noted that pilot trading behavior mirrored standard hours, indicating user adoption.
Furthermore, February's metrics continued the positive trend, with daily average trading volume up 1% YoY and core net new assets showing robust growth. While valuation metrics indicate SCHW trades at a premium compared to the industry average P/E and P/S ratios, its resilience commands this premium. The stock found strong technical support near its 200-week moving average and bounced, suggesting underlying strength. A breakout above the $84.04 resistance level could signal further upward momentum.
FAQ
- **Q: What is the significance of TD Bank selling its SCHW stake?
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- **Q: How does 24-hour trading impact Schwab and its customers?
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Takeaways
- **Resilience Indicator:** Schwab's stock performance serves as an indicator of a company navigating market volatility effectively.
- **Growth Drivers:** Strong asset inflows and revenue growth are key positives for the company's health.
- **Service Innovation:** The rollout of 24/5 trading demonstrates Schwab's commitment to enhancing its platform for clients.
- **Valuation Context:** While appearing pricey based on some metrics, its performance justifies a premium in the current market.
- **Technical Levels:** Keep an eye on key support and resistance levels ($70.75 support, $84.04 resistance) for potential future price movements.
Discussion
Schwab has shown impressive strength. Do you think this resilience will continue throughout the year? Let us know your thoughts!
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Sources
Source 1: Charles Schwab Stock: Trading Up in a Down Market - MarketBeat via The Globe and Mail target="_blank"
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