US investor optimism improved in the latest Wells Fargo/Gallup Investor Optimism Index, following a dip in the previous quarterly survey as investors faced mixed economic signals. The index score is now 84, up from 72 in the third quarter survey and on par with 85 in the second quarter survey.
Gallup conducted the poll between October 7-13 as the stock market was making modest gains. The survey also followed the federal government’s monthly jobs report announcing that hiring had cooled in September amid the ongoing trade war, but that the unemployment rate had dipped to 3.5%, a 50-year low.
“With a mix of encouraging and discouraging economic news, investors chose to focus on the positive, lifting their confidence in the economy as well as their own financial outlook,” said Adam Taback, deputy chief investment officer for Wells Fargo Private Bank.
Personal dimension of investor confidence is highest this year
Investor optimism on the economic dimension of the index had slumped to 16 last quarter from 35 earlier in the year. While it improved slightly to 20 in the most recent survey, the economic dimension remains weaker than it has been in some time. By contrast, investor optimism on the personal index has held firm each quarter, so that the eight-point increase in the current survey brings the personal dimension to its highest level in more than a year.
Optimism rose in the latest survey about equally between retired and non-retired investors; however, of the two groups, retired investors continue to express the greater optimism.
Investors say investment trajectory is positive
According to the Q4 survey, most US investors say their investment plan is on the right track (85%) and that they are prepared for a market correction (71%). Relatively few report that fear of a market correction is making their life stressful (33%), including similar proportions of non-retired and retired investors.
A different picture emerges when reviewing the percentages who “strongly agree” with each statement. On this basis, about one-quarter of investors express confidence that their investment plan is on the right track, including 32% of retirees and 23% of non-retirees.
Similarly, confidence in being prepared for a market correction drops from more than 70% total agreement among investors to 14% strong agreement. At the same time, investor anxiety registers just 5% when defined as those strongly agreeing that fear of a market correction is making their life stressful.
“While investors appear broadly confident about their retirement planning, most non-retirees and nearly half of retirees do harbour some doubts they are headed for success,” Taback said. “The same can be said for investors’ readiness for a market correction. While vast majority generally agree they’re prepared, most fall short of expressing complete confidence.”
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