Investor Enthusiasm Takes a Beating in Q2: E-Trade

Bullish sentiment among experienced investors has nosedived, according to the results of E-Trade Financial’s quarterly tracking study, released Friday.

Sentiment fell to 52%, a decline of 16 percentage points from the first quarter and 11 points from last year’s second quarter.

“After a 2017 defined by record-breaking highs, volatility now seems to be the name of the game,” Mike Loewengart, E-Trade’s vice president of investment strategy, said in a statement. “This shouldn’t come as too much of a surprise given trade tensions with China, tech stocks taking one on the chin amid data privacy issues, and some jobs data coming in at the end of the quarter as a bit of a mixed bag.”

That said, Loewengart noted that economic fundamentals remain strong as the earnings season commences, and many equities may be considered bargains by historical standards.

E-Trade conducted the online survey from April 1 to April 11 among 947 U.S. self-directed active investors who manage $10,000 or more in an online brokerage account.

Forty-six percent of investors in the study predicted that the market would rise in the second quarter, down 31 points from their first quarter prediction.

About three in five respondents agreed that the U.S. economy was healthy enough for the Federal Reserve to raise interest rates this quarter, down from two in three who said that in the previous quarter.

Asked which industries offered the most potential in the current quarter, 46% said health care.

Another 44% cited information technology, about the same as last quarter despite the battering the sector took in March. E-Trade said that amid the pullback in IT, many investors may be looking for bargains on stocks that experienced historically high valuations during the recent bull run.

Interest in the energy sector declined by six percentage points to 41% quarter on quarter. However, surveyed investors, taking note of tightening international supplies, continued to rate it high in potential this quarter compared with other sectors — telecommunication services, consumer staples, utilities, industrials and materials, all in the low-to-mid 20% range.