Reuters
- The Conference Board's most recent survey of consumers shows that Americans haven't been as bullish on stocks since January 2000.
- There's been a widening gap between rising expectations for higher stock prices and falling expectations for lower prices.
- But this week serves as a small reminder that stocks usually go up - just not always at their recent, breakneck speed.
Americans haven't been more optimistic about the stock market since the dotcom bubble at the turn of the millennium.
That's according to the January Survey of Consumers conducted by the Conference Board, which asks respondents whether they expect the stock market to be higher or lower over the next 12 months. The gap between rising expectations for higher stock prices and falling expectations for lower stock prices pushed the difference to its highest level since January 2000.
Neil Dutta, the head of economics at Renaissance Macro, drew our attention to this detail.
Renaissance Macro
After the market's parabolic surge in recent months, it's no surprise that consumers hope the good times continue, especially if they're in the market directly or through retirement plans.
The S&P 500 index has gone more than 400 days without a 5% pullback, the longest streak dating back to 1929. Even before January ended, the S&P 500 had risen above the levels that 10 out of 14 strategists polled by Bloomberg saw it ending the year.
"If January's surge is sustained, it would mean a 155% pop in the S&P 500 for the entire year," wrote David Rosenberg, the chief economist at Gluskin Sheff, in a note on Tuesday. "The average annual price performance for the S&P 500 is 7.5% - and we did that in less than one month."
This week serves as a small reminder that stocks go up over the long run, but not all the time, and not always at their recent pace. Stocks on Monday and Tuesday were on pace for their worst two-day drop in six months.
The consumers surveyed by the Conference Board may also be looking further ahead, hoping that higher company profits and lower taxes would continue to lift the market over the next year.