April 13 — The latest StreetWise study from E*TRADE finds that bullish sentiment among investors has fallen 16 percentage points to 52 percent, a decline from the first quarter of 2018 and an 11 point drop from the second quarter of 2017.
While, nearly three out of five investors believe the U.S. economy is healthy enough to support at least one rate hike in the second quarter of this year, this number is down 8 percentage points from the first quarter of 2018 and 4 percentage points from this time last year. Less than half of those surveyed believe the market will rise this quarter, down 31 percentage points from last quarter and 9 percentage points from a year previous.
“After a 2017 defined by record-breaking highs, volatility now seems to be the name of the game,” said E*TRADE’s Vice President of Investment Strategy Mike Loewengart. “This shouldn’t come as too much of a surprise given trade tensions with China, tech stocks taking one on the chin amid data privacy issues, and some jobs data coming in at the end of the quarter as a bit of a mixed bag.
“But all that being said,” he continued, “economic fundamentals remain strong as we enter earnings season, and, in taking a long-term view, many equities may be considered bargains by historical standards.”
As to what investors are willing to invest in, health care remains fairly strong. Almost half of all investors see this sector as potentially lucrative, up 5 percentage point from last quarter. This represents the strongest showing for the sector in more than a year, perhaps due to investors viewing the industry as traditionally defensive but without the interest rate exposure of other defensive sectors such as telecom and utilities.
Although IT investments experienced a rough March, interest in the industry remains steady at 44 percent. Many investors are eyeing bargain opportunities on stocks that have seen historically high valuations during the recent bull run.
Energy began the year as one of the worst performing sectors, but its recent resurgence has investors taking notice amid tightening international supply. While interest in the sector is down from the first quarter of 2018, investors continue to rate it highly in terms of potential, compared to other sectors.