Sentiment among traders dipped in the second quarter of 2024 but
remained higher than 2022 and 2023 levels according to the latest
Charles Schwab Trader Sentiment Survey, a quarterly study that
explores the outlooks, expectations, and perspectives of traders at
Charles Schwab. Of those polled, 46% reported a bullish outlook on
the U.S. stock market, down from 53% in the first quarter. Bearish
sentiment varied by age, but compared to last quarter, increased
significantly among young and mid-life investors, jumping more than
15% for each group.
Trader expectations for rate cuts moderated significantly
compared to last quarter, with 43% expecting up to 50 basis points
in rate cuts (up from 34%), 20% expect 51-100 basis points in cuts
(down from 47%) and only 5% expect cuts over 100 basis points (down
from 20%). A further 32% believe the Fed will not cut rates this
year, up from 10% last quarter.
Trader concerns and confidence
Inflation concerns have risen substantially among traders, more
than doubling quarter-over-quarter. The political landscape came in
as the second biggest concern, followed by worries that the market
is due for a significant correction.
Primary concerns around
investing
2Q ‘23
3Q ‘23
4Q ‘23
1Q ‘24
2Q ‘24
Inflation
8
%
10
%
11
%
9
%
19
%
Political landscape in D.C.
13
%
13
%
21
%
16
%
15
%
Market correction
7
%
10
%
8
%
9
%
13
%
Geopolitical or global macroeconomic
issues
10
%
8
%
5
%
18
%
11
%
Fed holding rates steady
n/a
1
%
3
%
6
%
6
%
Uncertainty/potential increase in market
volatility
6
%
7
%
7
%
9
%
5
%
Potential of a recession
18
%
14
%
11
%
9
%
4
%
“Traders began the year feeling pretty confident that the
economy was improving and Fed rate cuts would be quick to follow,”
said James Kostulias, head of Trading Services at Charles Schwab.
“But inflation concerns have jumped significantly. While about half
of traders believe we’ll avoid a recession this year, overall stock
market sentiment cooled a bit in Q2 as those concerns took hold and
expectations for rate cuts were significantly dialed back as key
drivers like the Consumer Price Index indicated inflation was once
again on the rise in March.”
Traders’ confidence in their decision-making hit a new high with
69% describing themselves as confident. Compared to last quarter,
significantly more respondents say they are spending more time
vetting or researching trades, using tools such as those available
through Schwab and its trading platforms, as a result of their
expectations for the economy.
Impact of expectations for the economy
on trading approach
1Q ‘24
2Q ‘24
Spending more time researching trades
before executing
28
%
41
%
Spending more time vetting trades with
tools available to me
20
%
33
%
“We saw a significant uptick this quarter in traders who say
they are spending more time researching trades before executing
them,” said Kostulias. “Trader education is a huge part of what we
offer at Schwab because we know that when traders have valuable
information at their fingertips, they actively use it to inform
their investing decisions, and that contributes to a high level of
confidence in their ability to reach their investing goals.”
Sector and asset class outlook
Most traders (64%) are bullish on the energy sector over the
next three months, followed by information technology (51%),
materials (40%) and health care (40%). On the flipside, traders are
most bearish on real estate (52%) followed by consumer
discretionary (43%), and finance (34%).
Traders remain bullish on AI stocks though 44% believe AI is the
most “crowded,” or over-bought, trade. Sentiment toward mega cap
tech and equities in general came in roughly flat
quarter-over-quarter, while bullishness toward both value stocks
and growth stocks ticked slightly downward.
Bullish Sentiment over next three
months
1Q ‘24
2Q ‘24
Artificial intelligence stocks
61
%
56
%
Mega cap tech stocks
49
%
47
%
Equities in general
48
%
50
%
Value stocks
54
%
49
%
Growth stocks
50
%
47
%
Most traders (63%) said they were considering trading options in
Q2, but few (13%) were planning to trade short-dated or zero
days-to-expiration options, despite reported growth in the use of
these strategies over the past year. Traders also displayed caution
toward cryptocurrency with only 15% considering trading
cryptocurrency in Q2.
Significantly more traders say they plan to add money to their
investment portfolio over the next three months (48%, up from 38%
in Q1). Other top near-term plans include moving money into
individual stocks and moving money into ETFs.
Portfolio Changes Planned in Next 3
Months
4Q ‘23
1Q ‘24
2Q ‘24
Move money into individual stocks
45
%
52
%
53
%
Add money into my portfolio
38
%
38
%
48
%
Move money into ETFs
33
%
39
%
41
%
Move money into fixed income
investments
26
%
27
%
23
%
Move money into cash investments
23
%
20
%
23
%
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 active traders at Charles Schwab (clients who actively
trade equities or trade options, futures, or forex). The study
included 920 active trader clients at Charles Schwab between the
ages of 18-75 and was fielded from April 10 - 19, 2024.
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
X, Facebook, YouTube, and LinkedIn.
Disclosures
Content intended for educational/informational purposes only.
Not investment advice, or a recommendation of any security,
strategy, or account type.
Historical data should not be used alone when making investment
decisions. Please consult other sources of information and consider
your individual financial position and goals before making an
independent investment decision.
All investments involve risk including the possible loss of
principal. Please consider all risks and objectives before
investing.
0524-37B4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240523392616/en/
Margaret Farrell Director, Corporate Communications (203)
434-2240 margaret.farrell@schwab.com
Charles Schwab (NYSE:SCHW)
Historical Stock Chart
From Aug 2024 to Sep 2024
Charles Schwab (NYSE:SCHW)
Historical Stock Chart
From Sep 2023 to Sep 2024