Schwab Q2 Trader Sentiment Survey: More Than Half of Traders Say the Market is Due for a Significant Correction in the Second Quarter
May 11 2022 - 9:00AM
Business Wire
A third of traders don’t expect inflation to
ease until 2024 at the earliest
The latest Charles Schwab Trader Sentiment Survey reveals that
more than half (53%) of traders say the market is due for a
significant correction in the second quarter of 2022, and fewer
than a third (30%) think the market will perform well. Six in 10
(61%) traders remain confident in their investment decision-making,
although less than half (43%) feel it’s a good time to invest in
equities. Chief among traders’ concerns are inflation and the
geopolitical landscape, and they’re taking specific actions to
hedge against both. While most traders (68%) expect sooner relief,
nearly one third (32%) of traders don’t expect inflation to ease
until 2024 at the earliest.
The Charles Schwab Trader Sentiment Survey is a quarterly study
that explores the outlooks, expectations, and trading perspectives
of traders at Charles Schwab and TD Ameritrade. It found:
Traders’ primary Q2 concerns
Expectations for when inflation will
begin to ease
Hedging against inflation with…
Hedging against geopolitical
risk by…
Inflation
20%
2022
23%
Real estate / REITS
32%
Moving assets to cash
28%
Geopolitics
15%
2023
45%
Gold
20%
Buying gold
15%
Potential recession
12%
2024
18%
Crypto or related products
18%
Buying crypto
11%
The DC political landscape
12%
2025+
14%
Agricultural commodities
15%
Moving out of emerging markets
8%
Not hedging against inflation
44%
Not hedging against geopolitical risk
48%
“Overall, in the second quarter, market sentiment among traders
is unquestionably skewing bearish,” said Barry Metzger, Head of
Trading and Education at Charles Schwab. “But traders see
opportunities in these kinds of markets. Despite the headwinds,
most remain confident in their decision-making, and in their
ability to meet their personal financial goals.”
Russian Bear
The conflict in Ukraine is top of mind for traders, with more
than half (56%) anticipating a “Russian Bear” by the end of the
year, meaning the major markets (Dow, S&P, Nasdaq) will finish
2022 in bear territory largely because of the conflict.
Expected likelihood of a “Russian
Bear”
Expected size of the “Russian
Bear”
Highly likely
5%
Small (1%-10% drop)
23%
Likely
15%
Medium (10%-20% drop)
60%
Somewhat likely
36%
Large (20%+ drop)
17%
Somewhat unlikely
21%
Unlikely
12%
Highly unlikely
5%
Don’t know
6%
Green Energy
Although overall sentiment is more bearish, traders do see
investing opportunities when digging into certain categories and
sectors. With oil prices surging, traders anticipate an
acceleration on the horizon for Green Energy. If prices continue to
rise, half of traders (50%) expect to adjust their trading strategy
in response.
Likelihood fossil fuel market
disruption leads to acceleration in green energy sector in
2022
Impact on trading strategy if oil
prices continue to rise
Highly likely
9%
Will invest more in energy equities
30%
Likely
14%
Will invest more in clean energy
equities
18%
Somewhat likely
29%
Will increase exposures to safe havens
11%
Somewhat unlikely
15%
Won’t change strategies
50%
Unlikely
15%
Highly unlikely
12%
Don’t know
7%
Sectors and Categories
At the sector level, traders are most bullish on Energy,
Utilities, Materials and Health Care. They’re most bearish about
Consumer Discretionary, Real Estate, Information Technology and
Finance.
Most bullish about…
Most bearish about…
Energy
70%
Consumer Discretionary
51%
Utilities
54%
Real Estate
50%
Materials
51%
IT
40%
Health Care
51%
Finance
36%
Consumer staples
48%
Communications
35%
Industrials
31%
At the thematic level, traders are most bullish on Cyber
Security and Defense Contracting, and most bearish on Automated
Cars and the Space Economy
Most bullish about…
Most bearish about…
Cyber Security
71%
Automated Cars
28%
Defense Contracting
70%
The Space Economy
26%
Agriculture
57%
Online Gaming
24%
Artificial Intelligence
56%
ESG
22%
Renewable Energy
55%
Blockchain
18%
About the Charles Schwab Trader Sentiment Survey
The Charles Schwab Trader Sentiment Survey is a quarterly study
exploring the outlooks, expectations, trading patterns and points
of view of traders at Charles Schwab and TD Ameritrade – defined as
those making more than 80 equity trades, more than 12 options
trades, or those who make futures or forex trades over the course
of the year. The study included 845 Trader clients at Charles
Schwab and TD Ameritrade between the ages of 18-75 and was fielded
from April 6-17, 2022.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
Investing involves risk including loss of principal.
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Margaret Farrell Charles Schwab (203) 434-2240
Margaret.farrell@schwab.com
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