U.S. investors’ optimism in the stock market has pushed the Wells Fargo/Gallup Investor and Retirement Optimism Index to its highest level since September 2000.
The index, after rising in every quarter since the start of 2016, leveled off in the second quarter at +124 before rising to its current +138 in the third quarter, Gallup reported.
The survey found that investor optimism about stock market matches the 1999-2000 record high.
- Sixty-eight percent now say they are optimistic about the stock market's performance during the next year, matching the record high for the question from December 1999 and January 2000.
- At least 61% have expressed optimism about the stock market in each of the three surveys this year, a percentage matched or exceeded only four other times in the 132 times the question has been asked since April 2000.
- Twenty-five percent say they are "very optimistic," topping the previous record high of 24% from the first quarter of this year. Only 11% were very optimistic a year ago.
The stock market has moved generally upward for the past eight years after bottoming out in the wake of the 2008 economic crash, but investors have been slow to shed their skepticism about stocks as a good investment. This year's continued climb of the market to record-setting heights, however, has given investors enough evidence that more than two-thirds are optimistic and one-fourth are now very optimistic about its near-term performance.
As the Dow and other key economic measures have continued to move in a positive direction over the past few months, retiree investors have grown more optimistic about meeting their financial goals. With the financial status of retirees becoming more and more important as baby boomers flood the retirement rolls, the growing confidence of retiree investors provides a welcome piece of evidence about their financial well-being.
The results come from a July 28-Aug. 6 Wells Fargo/Gallup Investor and Retirement Optimism Index survey of U.S. investors with $10,000 or more invested in stocks, bonds or mutual funds. The seven items that constitute the index include three on personal finances (meeting long-term investment goals, meeting short-term investment goals and maintaining income) and four on the economy (economic growth, the stock market, unemployment and inflation). The survey was in the field as the Dow Jones industrial average approached, then surpassed, the 22,000-point milestone for the first time.
Meanwhile, the U.S. economy probably grew faster than reported in the second quarter, with data on Thursday suggesting stronger consumer spending than previously estimated.
The quarterly services survey, or QSS, from the Commerce Department implied consumer spending increased more briskly than the 3.3 percent annualized rate reported last week in its second estimate of gross domestic product, Reuters reported.
The QSS report added to data on construction spending and factory orders in suggesting that second-quarter GDP growth could be revised higher from its 3.0 percent rate when the government publishes its third estimate later this month.
Considering the construction, factory orders and QSS data, JPMorgan is forecasting that GDP growth for the quarter would be raised to a 3.4 percent rate.
“We believe that the QSS points to an upward revision to the ... estimate of real consumption growth,” said economist Daniel Silver of JPMorgan in New York.
(Newsmax wires services contributed to this report).
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