Two-thirds of US investors question stock market sustainability
US, WASHINGTON (ORDO NEWS) — The current growth of stock markets cannot be considered sustainable, almost two-thirds of investors in the United States are confident. Although the indices are rising after the March collapse, an unfavorable situation may again suddenly appear in the market in the near future, they believe.
More than two-thirds of professional investors doubt that a rebound in stock markets after falling in March marks the beginning of a new growth period, writes CNBC with reference to a survey conducted by Bank of America. According to the channel, the study of the bank is closely monitored on Wall Street.
About 68% of respondents do not believe in stable market growth, although the S&P 500 index (which includes US listed companies with the highest capitalization) increased after the collapse in March by 32%. Investors believe that this rally still refers to the “bear” market, which is characterized by a general decline, in contrast to the steadily growing “bull” market. “This term [“ bear market rally ”] means that even though market growth exceeds 20%, which means the transition to a“ bull ”market, fundamental indicators still give rise to pessimistic sentiment,” CNBC explained.
Survey participants expect that in the near future a situation will arise in the market that will affect most investors by surprise, for example, a sharp change in prices of popular assets. Investors are now overestimating the market after the longest bull market in history ended abruptly after reaching record highs in February, CNBC said.
The fall in March was the fastest transition to a bear market, as quarantine and suspension of business worldwide forced investors to get rid of all assets and prepare for the worst, the channel added. After that, governments and central banks took unprecedented measures to support markets, people and businesses.
Investors consider investment in value stocks to be the worst bet at the moment, CNBC reports. Market participants prefer more “protective” instruments – cash and bonds. Of the sectors, they consider healthcare reliable and do not favor cyclical industries and tools, such as energy, stocks in general and assets in Europe, the channel claims. The share of cash in the portfolios of investors is 5.7% – this level is below the recent maximum of 5.9%, but is still considered increased. 73% of investors believe that companies now need to focus on balancing financial flows and closing debts.
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