Optimism is high on Wall Street mid-year. Investors are at their most optimistic since November 2021, according to a global fund manager survey (FMS) released Tuesday by Bank of America Securities. Not only are portfolio managers not expecting a recession, but they are betting big on stocks, especially the Magnificent Seven. Cash levels are at a three-year low. The market seems to be doing well. The S&P 500 and Nasdaq Composite are at record levels midway through 2024 and closed at record highs again on Monday. The broad market index is now within touching distance of 5,500, a milestone that would have stunned many strategists at the start of the year. .SPX YTD Mountain S&P 500 in 2024. “June FMS sentiment is at its most bullish level since November 21,” wrote Bank of America investment strategist Michael Hartnett. “Our broadest measure of FMS sentiment, based on cash levels, stock allocations and economic growth expectations, increased to 6.03 from 5.99 last month.” However, this optimism has some investors wary of a possible reversal. In November 2021—the last time Wall Street was this bullish—the S&P 500 ended a strong year, up more than 26%. However, the following year, 2022, the broader index fell more than 19% as the Federal Reserve began raising interest rates, triggering a correction in large-cap technology stocks. In fact, investors are concerned about the possibility of more volatility in the second half of 2024. A survey of fund managers shows inflation concerns have eased in investors’ minds, although it remains a top concern, while concerns about geopolitical risks and the US presidential election have risen. Inflation is the number one risk for investors (according to 32% of investors, up from 41% in May), followed by geopolitics (22%, up from 18%) and the US presidential election (16%, up). from 9%). However, at the moment, according to the survey, the outlook for the market appears optimistic. Roughly two-thirds, or 64%, of money managers are in the soft landing camp (where the economy is slowing but not falling into recession), which is entirely consistent with the consensus view. Expectations for a hard landing have hit a new low, falling to just 5%, the survey says. Meanwhile, 80% of investors expect at least two or more interest rate cuts next year, with the first coming in September. In stocks, investors remain deeply invested in the Magnificent Seven, which are the most crowded since October 2020, according to the survey. .MAG7 Mountain YTD CNBC Magnificent 7 YTD Index.
