The latest Charles Schwab Trader Sentiment Survey unveils a significant shift towards optimism among retail traders, with over half displaying a bullish stance on the U.S. stock market for the first quarter of 2024. This sentiment marks a notable rise in confidence, reaching its peak since the survey’s inception in 2021.
The survey, capturing the perspectives of Charles Schwab traders, highlights that 53% of participants hold a bullish outlook for the U.S. stock market, a sharp increase from the 32% recorded in the final quarter of the previous year.
The optimism is also reflected in the 49% of traders who now believe it’s an opportune time to invest in equities, marking a rise from 41% in the last quarter.
Traders’ perspectives on the economy have also seen a positive adjustment, with nearly half (48%) opining that the U.S. is likely to sidestep a recession in 2024, a significant leap from 23% in the previous quarter.
Despite the uplift in sentiment, traders remain wary of geopolitical tensions and the macroeconomic landscape, with these factors topping their list of concerns. However, the survey also reveals a record high in traders’ confidence in their decision-making, standing at 68%.
Primary Concerns
| Concern | 1Q ‘24 | 4Q ‘23 | 3Q ‘23 | 2Q ‘23 | 1Q ‘23 |
|---|---|---|---|---|---|
| Geopolitical or global macroeconomic issues | 18% | 5% | 8% | 10% | 9% |
| Political landscape in D.C. | 16% | 21% | 13% | 13% | 12% |
| Market correction | 9% | 8% | 10% | 7% | 6% |
| Uncertainty/potential increase in volatility | 9% | 7% | 7% | 6% | 7% |
| Potential of a recession | 9% | 11% | 14% | 18% | 15% |
| Inflation | 9% | 11% | 10% | 8% | 12% |
| Fed holding rates steady | 6% | 3% | 1% | n/a | n/a |
Sector and Asset Class Outlook: Traders show a clear preference for information technology (55%), as tracked by the Technology Select Sector SPDR Fund XLK; healthcare (51%) and energy (46%) sectors.
Conversely, real estate (41%) and consumer discretionary (35%) sectors are viewed with skepticism. AI stocks (61%) and value stocks (54%) are among the favored investment choices, while international stocks (35%), U.S. Treasuries (33%), and cryptocurrencies (32%) are less popular.
Portfolio Changes: The survey also sheds light on traders’ future investment plans, with a significant number leaning towards individual stocks and ETFs in the coming months.
Portfolio Changes Planned in Next 3 Months
| Action | 1Q ‘24 | 4Q ‘23 |
|---|---|---|
| Move money into individual stocks | 52% | 45% |
| Move money into ETFs | 39% | 33% |
| Move money into fixed income | 27% | 26% |
| Move money into cash investments | 20% | 23% |
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