SCHW Stock Falls -13% In 5-day Losing Spree On Morgan Stanley Downgrade
Charles Schwab (SCHW) – a provider of retail brokerage, advisory, banking, and retirement services – hit a 5-day losing streak, with cumulative losses over this period amounting to -13%. The company’s market cap has crashed by about $26 Bil over the last 5 days and currently stands at $168 Bil.
The stock has YTD (year-to-date) return of 6.5% compared to 0% for S&P 500. This calls for a re-evaluation of the stock’s valuation to find out whether this is an opportunity or a trap.
What Triggered The Slide?
[1] Morgan Stanley Downgrade to Equal Weight
- Rising client outflows from low-interest accounts
- Concerns over significant unrealized losses
- Impact: Price Target Cut From $99 to $68, Heightened Investor Concern
[2] AI Disruption Fears from Competitor Tool
- Competitor Altruist launched an AI-powered tool
- Fears of disruption to traditional business models
- Impact: Stock declined 6,9% in one session, Sector-wide selloff in wealth management
Opportunity or Trap?
Below is our take on valuation.
There is not much to fear in SCHW stock given its overall Strong operating performance and financial condition. Hence, despite its Moderate valuation, this makes the stock look Risky (For details, see Buy or Sell SCHW).
But here is the real interesting point.
You are reading about this -13% move after it happened. The market has already priced in the news. To avoid the next loser before the headlines, you need predictive signals, not notifications. Our High Quality Portfolio has a risk model designed to reduce exposure to losers.
Returns vs S&P 500
The following table summarizes the return for SCHW stock vs. the S&P 500 index over different periods, including the current streak:
| Return Period | SCHW | S&P 500 |
|---|---|---|
| 1D | -0.7% | 0.1% |
| 5D (Current Streak) | -13.2% | -1.7% |
| 1M (21D) | -9.1% | -1.5% |
| 3M (63D) | -1.8% | 1.6% |
| YTD 2026 | -6.5% | -0.0% |
| 2025 | 36.6% | 16.4% |
| 2024 | 9.2% | 23.3% |
| 2023 | -16.0% | 24.2% |
Take a look at what history tells you about whether past dips like this have been buying opportunities or traps: SCHW Dip Buyer Analysis.
Gains and Losses Streaks: S&P 500 Constituents
There are currently 44 S&P constituents with 3 days or more of consecutive gains and 40 constituents with 3 days or more of consecutive losses.
| Consecutive Days | # of Gainers | # of Losers |
|---|---|---|
| 3D | 18 | 25 |
| 4D | 6 | 4 |
| 5D | 6 | 7 |
| 6D | 5 | 3 |
| 7D or more | 9 | 1 |
| Total >=3 D | 44 | 40 |
Key Financials for Charles Schwab (SCHW)
Last 2 Fiscal Years:
| Metric | FY2023 | FY2024 |
|---|---|---|
| Revenues | $18.8 Bil | $19.6 Bil |
| EBT | $6.4 Bil | $7.7 Bil |
| Net Income | $5.1 Bil | $5.9 Bil |
Last 2 Fiscal Quarters:
| Metric | 2025 FQ2 | 2025 FQ3 |
|---|---|---|
| Revenues | $5.9 Bil | $6.1 Bil |
| EBT | $2.8 Bil | $3.0 Bil |
| Net Income | $2.1 Bil | $2.4 Bil |
The losing streak SCHW stock is currently on doesn’t inspire much confidence among investors. In contrast, Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.