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Portfolio > Portfolio Construction

Investors' Economic Optimism Dips: Survey

By Michael S. Fischer

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Sixty percent of investors in a new quarterly survey said they are bullish, consistent with last quarter, Morgan Stanley Wealth Management reported this week.

However, fewer investors are optimistic about the American economy. Fifty-three percent agreed that the Federal Reserve will be able to deliver a “soft landing,” down 7 percentage points from the first quarter.

Half of respondents said they do not plan to make changes to their portfolios for the next six months, compared with 42% who said this last quarter. Moreover, only 10% plan to move out of their current positions into cash, down from 14%.

In terms of the effects on their portfolios, investors this quarter are most concerned about inflation and the November elections. The number of those worried about rising prices ticked up to 53% from 49%, and from 26% to 31% about the elections.

Concerns about a recession eased from 24% to 20%, and held steady at 22% about market volatility.

“The U.S. stock market is coming off one of its strongest first quarters of the past 20 years, and so it should not be too large a surprise to see it pull back,” Christopher Larkin, head of trading and investing at E-Trade from Morgan Stanley, said in a statement. 

“Yet despite economic uncertainty amid the revised pace of rate cuts for the year, along with uncertainty around the 2024 election, investors remain optimistic about the market.” 

Dynata conducted the online survey from April 1-17 among 875 U.S. self-directed investors, investors who fully delegate investment account management to financial professionals and investors who do both. Sixty percent were male, and 40% female. The panel was broken into three levels of investable assets: less than $500,000, between $500,000 and $1 million, and more than $1 million. 

Q2 Opportunities

The survey explored investor views on second-quarter sector opportunities. Amid continued interest in chipmakers and artificial intelligence, technology remained the top choice this quarter, cited by 52% of respondents. 

After the first three months of the year showed glimpses of recovery from 2023, 43% of investors saw opportunity in energy as oil prices rallied to multi-month highs. 

The traditionally defensive health care sector secured the third spot, cited by 36% of investors — who perhaps used it as a hedge, Morgan Stanley said.

Other industries in which investors saw opportunities this quarter: 

  • Real estate: 30%
  • Financials: 27%
  • Utilities: 24%
  • Communication services: 20%
  • Industrials: 20%
  • Consumer staples: 20%
  • Materials: 16%
  • Consumer discretionary: 12%

Michael S. Fischer

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