Investor Confidence Soars as U.S. Stocks Surge

1 Mins read

According to the latest survey data shared on Friday, investors responded to a Vanguard survey by expressing their highest bullish sentiment on stocks since late 2021. As the year came to a close, investors in December expected stocks to yield a return of 5.7% over the next 12 months, surpassing their previous expectation of 2.7% for 2023. This surge in optimism aligns with their positive outlook for stocks in December 2021, when they anticipated a 6% stock market return for 2022.

However, despite their optimism, stocks performed significantly worse in 2022 than expected. FactSet data reveals that the S&P 500 had its worst calendar-year showing since 2008, finishing the year down 19.4%.

Xiao Xu, an analyst in Vanguard Investment Strategy Group, states, “Investors are brimming with confidence going into 2024. Their optimism about the stock market has hit its highest level in two years, following the recent surge in U.S. equities.”

Looking ahead, investor expectations for stock returns over the next 10 years have risen slightly to 7.2%, surpassing Vanguard’s forecast range of 4.2% to 6.2%.

Investors surveyed in December also expressed positive views on the U.S. economy. After remaining stable for most of the year, expectations for GDP growth over the next three years surged to 3.5% in December, marking one of the highest levels ever recorded by the Vanguard survey, which has been conducted bi-monthly since February 2017.

While short-term expectations for growth saw a significant increase, long-term expectations only saw a slight rise.

Closing Remarks:

The S&P 500 gained 8 points, or 0.2%, on Friday, continuing its streak towards a sixth-straight record close at around 4,903. The Dow Jones Industrial Average gained 117 points, or 0.3%, reaching 38,166, while the Nasdaq Composite gained 13 points, or 0.1%, closing at 15,524.

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