Major increase in bullish individual investor sentiment: survey

January 23, 2024

Investor sentiment is key to drive market momentum. Image: Shutterstock

Bullishness has increased among U.S. investors with beliefs in future rate cuts growing.

More than half of investors (60 percent) are bullish this quarter — up 9 percentage points from fourth-quarter 2023, according to the Morgan Stanley Wealth Management Pulse Survey for this quarter.

“With the Fed broadcasting interest rate cuts in 2024, it’s not surprising to see traders reengaging with the market,” said Chris Larkin, managing director and head of trading and investing at E*TRADE from Morgan Stanley, in a statement.

“That said, as we kick off the year with relatively muted stock performance, investors may need to be patient with when these cuts will actually take place,” he said. “Economic metrics continue to be strong, so there may not be a huge rush from the Fed.”

Fielded and administered by Dynata, this wave of the survey was conducted Jan. 3-17 among an online U.S. sample of 903 self-directed investors, investors who fully delegate investment account management to financial professionals, and investors who use both. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level.

Bullishness has increased among U.S. investors with beliefs in future rate cuts growing. Image: Morgan Stanley

Upbeat
Optimistic views of the economy ticked up, per the Morgan Stanley survey results.

Three in five investors (60 percent) believe that the U.S. Fed can execute a ‘soft landing’ — up 7 percentage points since last quarter.

Further, more than half think the economy is healthy enough for a rate cut (58 percent).

Investors remain engaged with the market.

More than two in five investors (42 percent) said they do not plan to make any changes to their portfolios for the next six months, followed by 26 percent noting that they will change allocations, and 18 percent plan to move out of cash and into new positions.

Yet, inflation continues to be a top concern.

Nearly half (49 percent) said inflation is the top concern for their portfolio, followed by this year’s presidential election (26 percent), and a recession (24 percent).

The survey also explored investor views on sector opportunities for the first quarter of 2024.

IT: Technology moved back into the top spot for where investors see opportunity this quarter.

This perennial favorite saw increased interest — up 7 percentage points from last quarter to 53 percent — as rate cuts could further strengthen the sector.

Energy: Interest in energy slipped but remained high with 45 percent of investors eyeing opportunities in the sector, as it underperformed in 2023.

Healthcare: Investor interest remains steady in this historically defensive sector, at 38 percent.

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Major increase in bullish individual investor sentiment: survey

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