A Merrill Lynch survey reveals that money managers are becoming more hopeful when it comes to domestic stocks - a region they have been shying away from for the past two years or so - because of forecasts for economic and profit growth, Bloomberg News reports.
"People are having a rethink about their position on U.S. equities," said David Bowers, chief global strategist at Merrill. Investors "have a deep-seated conviction that the U.S. economy will fare well," Bowers added.
This month, cash holdings plummeted to their lowest level in about two years, and at the same time, technology companies were investors' favorites.
Thirty-five percent of survey respondents said that they planned to increase their holdings in domestic equity stocks in the first quarter of 2006, up from 28% who said the same in November and 19% in October.
Thirty-eight percent of investors said global economic growth would be the engine that accelerates the market, up from 31% in November. Ninety-three percent say that a recession is unlikely.
Earnings expectations have also increased in December, and investors said they expect that profits will increase by 5.8% in a year, higher than last month's 5.1%.
"We still find people pretty positive about the markets," Bowers said. "Risk appetite remains strong."
The survey polled 295 money managers, who in total manage $941 billion in assets, between Dec. 2 and Dec. 8.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.