Benzinga - Charles Schwab Corporation (NYSE: SCHW) just released its quarterly trader sentiment survey, and the results suggest traders are getting more bullish on the stock market despite ongoing concerns about rising interest rates and inflation.
The Stock Market: Traders went from 18% bullish on stocks in the fourth quarter to 35% bullish in the first quarter, Schwab reported. The sentiment shift among younger traders has been even more dramatic, swinging from 15% bullish in Q4 to 40% billish in Q1.
Exactly 50% of traders say it's currently a good time to buy stocks, up from 45% last quarter. On a sector-by-sector basis, traders are most bullish on the Energy (61%) and Health Care (56%) sectors and most bearish on Real Estate (62%) and Consumer Discretionary (48%) stocks. Roughly 57% of traders are bullish on value stocks compared to 36% who are bullish on growth stocks.
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When it comes to AMC Entertainment Holdings Inc (NYSE: AMC), GameStop Corp. (NYSE: GME) and other meme stocks, 57% of stock traders are bearish compared to only 6% who are bullish. Traders also have a bearish outlook for Bitcoin (CRYPTO: BTC) and other cryptocurrencies. Only 14% of traders are bullish on cryptos in 2023, while 49% are bearish.
The Economy: When it comes to the economy, 87% of traders say a recession is likely this year or has already begun. Among traders anticipating a recession, nearly two-thirds (65%) predict the recession will last less than one calendar year.
Not surprisingly, traders reported inflation and interest rates are their primary concerns in 2023. Fortunately, 68% of respondents said they expect inflation to ease throughout the year, but only 7% of traders anticipate a Federal Reserve pivot to interest rate cuts this year. Traders said interest rates (20%) and a potential recession (18%) will be the biggest factors influencing the SPDR S&P 500 ETF Trust (NYSE: SPY) in 2023.
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Benzinga's Take: The survey results are logical and understandable given rising interest rates are bad news for risk assets like growth stocks, meme stocks and cryptos. What's surprising is how much more bullish investors have gotten overall in the first quarter given nearly nine out of 10 expect an economic recession this year.
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