More than half of traders have a bullish outlook for the first quarter – the highest level of bullishness since 2021

Trader sentiment has turned bullish according to the latest Charles Schwab Trader Sentiment Survey, a quarterly study that explores the outlooks, expectations, and perspectives of traders at Charles Schwab. More than half of respondents (53%) report a bullish outlook on the U.S. stock market – the highest level since the survey began in 2021 and a significant increase from the 32% who were bullish in the fourth quarter of last year. Additionally, 49% of traders believe it’s a good time to invest in equities, up from 41% last quarter.

Traders’ outlook for the economy has also become more optimistic. Nearly half (48%) of traders think the U.S. will likely avoid a recession in 2024, up from 23% last quarter.

“As the economy continues to show signs of improvement, trader optimism is on the rise with bullishness at its highest level since we began the survey,” said James Kostulias, head of Trading Services at Charles Schwab. “That said, there is still plenty of uncertainty out there, from global conflicts to the upcoming election to the path of inflation.”

Trader concerns and confidence

In the first part of 2024, geopolitical and global macroeconomic issues emerged as the top concern weighing on traders’ minds (18%), followed by the political landscape in Washington, D.C. (16%). This represents a shift from recent months; in Q4 2023, the political landscape dominated traders’ concerns. Worry over the potential for a recession, meanwhile, has dropped steadily since its peak in Q2 2023.

Primary concerns around investing

1Q ‘24

4Q ‘23

3Q ‘23

2Q ‘23

1Q ‘23

Geopolitical or global macroeconomic issues

18%

5%

8%

10%

9%

Political landscape in D.C.

16%

21%

13%

13%

12%

Market correction

9%

8%

10%

7%

6%

Uncertainty/potential increase in market volatility

9%

7%

7%

6%

7%

Potential of a recession

9%

11%

14%

18%

15%

Inflation

9%

11%

10%

8%

12%

Fed holding rates steady

6%

3%

1%

n/a

n/a

Traders point to the U.S. presidential election (42%), the direction of the federal funds rate (37%) inflation (34%) and geopolitical conflict (31%) as the factors that will have the biggest impacts on the markets this year.

Concerns aside, traders’ confidence in their own decision-making, similar to bullishness, hit the highest level since Schwab began its survey at 68%. Additionally, the number of traders who say they feel better off financially compared to a year ago reached 54%, up 21 percentage points quarter-over-quarter.

“It’s encouraging to see that traders’ overall confidence in their decision-making continues to grow,” said Kostulias. “Part of that is market-driven, but it also aligns with what we’re seeing in terms of trader clients’ interest and engagement with investing and educational tools, content, and research. As traders utilize more tools and resources, they are in a better position to vet ideas and strategies and make informed trading decisions. That is why this is such a big focus at Schwab, and a critical component of the Schwab Trading Powered by Ameritrade ecosystem.”

Sector and asset class outlook

At the sector level, traders are most bullish on information technology (55%), followed by health care (51%) and energy (46%). They are most bearish about real estate (41%) and consumer discretionary stocks (35%).

Traders are largely bullish on AI stocks (61%), as well as value stocks (54%) and domestic equities (52%), while they are most bearish on international stocks (35%), U.S. Treasuries (33%), and cryptocurrency (32%).

Looking ahead to the next three months, about half of traders plan to move money into individual stocks while nearly 40% plan to move money into ETFs.

Portfolio Changes Planned in Next 3 Months

1Q ‘24

4Q ‘23

Move money into individual stocks

52%

45%

Move money into ETFs

39%

33%

Move money into fixed income investments

27%

26%

Move money into cash investments

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 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 762 Active Trader clients at Charles Schwab and TD Ameritrade between the ages of 18-75 and was fielded from January 12 - 27, 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.

Charles Schwab & Co., Inc. ("Schwab") and TD Ameritrade, Inc., members SIPC, are separate but affiliated subsidiaries of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

0224-L9ZL

Margaret Farrell Director, Corporate Communications (203) 434-2240 margaret.farrell@schwab.com

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