Shares of Charles Schwab declined 1.4% on Friday, closing at $93.72 and lagging behind a relatively flat S&P 500 index. The move came after the brokerage released its monthly activity report, revealing a mixed picture for the start of the year.
January Activity Shows Diverging Trends
The firm reported $27.8 billion in core net new assets for January, a sign of continued client engagement. Total client assets grew 18% year-over-year to $12.15 trillion, while new brokerage accounts increased 10% to 476,000. However, a key earnings driver—transactional sweep cash—fell by $20.4 billion to $433.3 billion. Schwab attributed this decline to typical seasonal patterns seen in January.
Schwab's business model is particularly sensitive to interest rate movements, as it earns money on the spread between what it makes on client cash and what it pays out. This makes updates on cash balances closely watched by investors, especially amid shifting expectations for Federal Reserve policy.
Market Context and Dividend Update
The stock also traded ex-dividend on Friday, following the company's announcement of an increased quarterly payout of 32 cents per share, payable on February 27. This technical adjustment can sometimes exert downward pressure on a stock's price.
Market attention is now turning to the upcoming release of the Federal Reserve's January meeting minutes on February 18, along with revised GDP and personal income data due on February 20. These releases are critical for rate-sensitive financial stocks like Schwab.
U.S. markets will be closed on Monday in observance of Washington's Birthday. The interplay between client asset growth, cash balance trends, and the broader interest rate environment will likely remain a focal point for Schwab investors in the coming sessions.
