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Will markets follow slumping e-trading?

Analysts on Wall Street have raised concerns recently about a slowdown in online trading activity, and some market watchers worry other traders may follow suit. Bob Moon reports.

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Steve Chiotakis: Maybe you’re one of those who trades stocks online. A number of analysts on Wall Street have raised concerns recently about a slowdown in online trading activity. That calls into question the fortunes of Charles Schwab and TD Ameritrade among others. More from Marketplace senior business reporter Bob Moon.


Bob Moon: E*TRADE might advertise that trading stocks is child’s play with those commercials featuring that wisecracking talking baby:

E*TRADE Baby: A lot of people are like, “Aren’t you too young to invest in the markets?” And, you know, A) don’t worry about it. I mean, you don’t know how old I am. And, B) I use E*TRADE. So, check it — click.

But it’s been mostly the big boys who’ve run up the markets in the past year. Once-burned, twice-shy mom-and-pop investors have largely stayed away. You might think the Dow’s rebound above 10,000 would be an enticement. But in recent months, E*TRADE reported plunging trading volume — and now market watchers worry others may follow suit.

Morningstar analyst Jason Ren hints the market might be a victim of its own success:

Jason Ren: There probably was a feeling, as we rolled on through the course of 2009, people were afraid that they missed the boat.

That may have discouraged them from hopping on too late, and now talk of an impending “correction” could cause more doubts:

Ren: If things just kind of putter along and we’re in this sort of malaise, trading volumes could stay depressed for quite some time.

Like the overall economic recovery, it seems restoring faith in stocks is a long, slow climb.

I’m Bob Moon for Marketplace.

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