Investor bullishness is at a 3-year high but concerns about inflation have soared, E*Trade survey reveals

• 65% of active investors said they are bullish about the current market in a recent E*Trade survey.
• Meanwhile, the number of investors who said inflation is a top concern skyrocketed from the previous survey.
• Inflation data released Tuesday showed prices increased more than expected in June.

A small survey from E*Trade reveals that investors are growing more optimistic about the stock market, but are also significantly more concerned about inflation than they were a few months ago.

In a July survey of 898 self-directed active investors, 65% of respondents said they are "bullish" about the current market. That's up from 61% in the previous quarter's survey and marks a three-year high.

Meanwhile, concerns about inflation skyrocketed 21 percentage points from the previous survey, with 35% of respondents selecting inflation as one the top two risks they see to their portfolios. Market volatility (27%), coronavirus (23%), and a recession (17%) followed behind.

In the previous quarter's survey, only 14% of respondents selected inflation as one of the top two portfolio risks.

On Tuesday, inflation data reflected in the Consumer Price Index showed that prices roses more than expected in June. CPI increased 0.9%, the largest one-month change since June 2008. Core inflation has now exceeded 0.7% for three consecutive months, though many on Wall Street and the Federal Reserve insist that inflationary pressures will be transitory.

"The headline CPI numbers have shock value, for sure; however, once you realize that a third of the increase is used car prices, the transitory picture becomes more clear. Inflation is rising, but things are well behaved and have not changed materially," said Jamie Cox, managing partner for Harris Financial Group.

The survey was conducted from July 1-9 2021 among an online US sample of 898 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level. It was fielded and administered by Dynata.