A majority of online investors polled by web-based brokerage firm TradeKing have a more bullish stance on the stock market for the rest of this year.
Even amid the ongoing stock market gyrations, stagnant employment numbers and uncertainty about interest rates, investors are still counting on the United States to lend horsepower to a global economic recovery.
According to the survey of 3,000 clients via e-mail conducted in late April, 71% said they believe the Standard & Poor’s 500 will rise between 5% and 20% by the end of this year, compared with about 66% who said they believed the same thing in January.
Among those who thought they would get tax refunds, 26% are using the money to further invest in the stock market. Just 18% are using it to pay down personal debt, 17% are saving their refunds.
In April 2008, the last time TradeKing asked that question on its quarterly survey, 25% of respondents said they favored using the proceeds to pay down debt, compared with 20% who said they might put the money into a brokerage account.
Some of this came as a surprise to Don Montanaro, TraeKing’s chairman and chief executive officer.
“What we see playing out in this topsy-turvy market, is a fairly xenophobic view of the market, a U.S.-centric view,” he said. “Certainly we read headlines that are less negative, but I did not think it would be enough to move the needle that much in a quarter. But it has.”
Take unemployment for instance, which rose to 9.9% last month, according to the Bureau of Labor Statistics. “Personally, I believe you need to see a move down in the unemployment numbers before people have that kind of conviction,” Montanaro said.
None of the findings suggest that investors are detached from the realities of the market, however. Actually, 45% of respondents said that unemployment claims and interest rates in particular as their top options trade triggers to watch closely over the next three months. Also, investors believe the Federal Reserve would only raise interest rates if the central bank believes the economy can withstand the change without going into a double-dip recession. “That is the ultimate vote of confidence,” Montanaro said. “They’ll see that as a bullish indicator.”
For the near term, 40% of all respondents are taking a “neutral” position on the market for the next three months, meaning they are taking stock of various indicators and headlines before executing trading tactics.