Bloomberg News

SAN FRANCISCO - Charles Schwab Corp., which runs the largest online brokerage, said trading rose 10% in July, a sign that retail investors who retreated from losses this spring may be returning to the market.

Trades averaged 271,000 a day, up from about 246,000 in June, the firm reported. The latest figure was up 43% from July 1999. Revenue-making trades climbed 9% from June, to 217,000 a day in July.

Nasdaq market activity overall surged to more than 1.8 billion shares a day in March and then fell to 1.4 billion shares in May as the Nasdaq composite index's drop made investors more cautious.

"That underlying confidence in the markets for the long term is still there," said Gregory Smith, an analyst at Chase H&Q in San Francisco. "People may have lost some money in the turmoil of March [and] April … but they're still putting money into the market."

It could be too soon to deem the gain anything more than seasonal, Schwab spokesman Dan Hubbard said. The brokerage said trading growth staged similar rebounds for the past three years.

Yet Mr. Smith noted vigor in Schwab's business on several fronts. "You had every single category with positive net flows," he said. "That hasn't happened for almost two years."

Client assets totaled $936.8 billion, up 36% for the past year. Included in the sum were $21.3 billion of net new investment gained in July.

A new mutual-fund clearing program made up $10.8 billion of the new assets, Schwab said.

The program, previously provided to banks KeyCorp and First Union Corp., lets a financial institution offer clients a mutual fund marketplace.

Most striking, in Mr. Smith's view, was Schwab's ability to gain last month even as the Nasdaq index lost another 5%. "This is foreshadowing that the end of the year and the beginning of '01 could be very strong for this business," he said.

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