Investor sentiment is rapidly improving, according to a new survey from Bank of America (BAC).
Amid speculation that inflation has now peaked, investors are no longer “apocalyptically
bearish” about stocks, Bank of America’s monthly survey of fund managers has found.
Global growth and profit expectations have rebounded from all-time lows in July, and 88% of
investors say they now expect lower inflation over the next 12 months.
U.S. stocks have rallied in the past month on the back of better-than-expected corporate
earnings and optimism that a cooling in U.S. inflation will cause the U.S. Federal Reserve to
scale back the pace of its interest-rate increases.
The technology-heavy Nasdaq 100 index is up 23% since June as rate-sensitive growth stocks
lead the market higher.
For the first time since August 2020, fund managers say they expect growth stocks to
outperform value stocks over the next 12 months.
However, while sentiment towards equities has improved, the number of investors expecting a
global recession in the next 12 months rose to 58%, the highest level since May 2020.
The survey also found that investors are long stagflation plays such as commodities and cash,
and are short European and emerging market stocks.
