Retail Traders are Bullish on US Stocks, Economy: Schwab Survey

In a recent Charles Schwab survey, retail traders have expressed unprecedented optimism toward the U.S. stock market for the first quarter of 2024, with bullish sentiment hitting its highest level since its inception in 2021. Over half of the respondents (53%) anticipate positive market movements, a substantial rise from the 32% recorded in the final quarter of 2023.

This optimism extends to the broader economy, with nearly half of the traders predicting that the U.S. will sidestep a recession this year, a significant jump from previous expectations. Despite ongoing concerns about geopolitics, the domestic political scene, and economic uncertainties, confidence among traders in their investment decisions has soared to a record 68%, with many feeling financially better off than a year ago.

The survey also highlights a strong preference for investments in the information technology, health care, and energy sectors, alongside a growing interest in AI and domestic equities, as traders adjust their portfolios for the upcoming months.

Retail Traders Bullish on US Stocks, Economy

More than half of traders surveyed by Charles Schwab have a bullish outlook on the U.S. stock market for the first quarter of 2024, marking the highest level of optimism since the survey began in 2021. The surge in bullish sentiment represents a significant increase from the previous quarter, with 53% of traders feeling optimistic compared to just 32% in late 2023. Nearly half also believe it’s a good time to invest in equities, and a similar share thinks the U.S. will likely avoid a recession this year, up sharply from last quarter.

While geopolitics, the economy, and the political landscape in Washington remain top concerns, worries about a potential recession have decreased since mid-2023. Traders see the U.S. presidential election, federal funds rate, inflation, and geopolitical conflicts as factors most likely to impact markets significantly. Confidence in personal decision-making is at an all-time high for the survey at 68%, with over half feeling financially better off than a year ago.

Traders are bullish on the information technology, health care, and energy sectors while bearish on real estate and consumer discretionary stocks. Optimism is highest for AI stocks, value stocks, and domestic equities but low for international stocks, U.S. Treasuries, and cryptocurrency; about half plan to move money into individual stocks and 40% into ETFs in the next three months as they proactively adjust portfolios.

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S&P 500 in 2024 So Far

The S&P 500 Index closed at 4981.80 on Wednesday, up 6.29 points or 0.13% from the previous day’s close of 4975.51. While the benchmark is up 1.79% over the last month, 9.33% over the last quarter, and 24.16% higher than a year ago, it has declined 0.95% over the past five days. For the year so far, the S&P 500 has gained 4.44%. The 52-week range for the index is 3808.86 to 5048.39.

Do you agree with the optimistic outlook for US stocks and the economy? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.