Investors remained negative on stocks in the most recent survey from the Conference Board released on Tuesday. But that might not be a bad thing for stocks.The Conference Board’s "bull-bear spread," which measures the difference between respondents who say stocks will fall and those who say they will rise, extended its negative run in April to 16 months.The bull-bear spread has been negative for more than nine months only three other times in history, according to data from Bespoke Investment Group. Each time such a streak ended, the S&P 500 delivered above-average returns in the following 12 months, with returns ranging from 11% to 36%.“Based on these prior streaks, prolonged periods where consumers harbor negative sentiment towards equities appear to create a pent-up demand for stocks once that period of pessimism finally ends,” Bespoke wrote in a note to clients on Tuesday.
As Bespoke highlights, the bearish sentiment has a near record number of investors sitting on the sidelines with cash in money market funds.As of April 19, total net assets in money market funds sat at $5.21 trillion, about $300 million higher than in the first week of January and just off the all-time highs reached during the March banking crisis, per the Investment Company Institute.Research from strategists at Bank of America on Monday agreed that cash coming out of equities doesn’t necessarily mean the outlook for stocks should be bad. “Everyone hates stocks,” topped a list of 10 reasons BofA strategist Savita Subramanian argued in favor of the upside risk in stocks vs. bonds."Everyone hates stocks and loves bonds: individual investors are selling stocks to buy bonds, institutional investors and asset allocators have the lowest stock v. bond allocation since 2009, and one [in] three Wall Street strategists tracked by Bloomberg expect a 5%+ drop from here."Despite a largely negative segment from investors, all three major indices are higher year-to-date, with the Nasdaq rising more than 14% since Jan 1. Earnings are still coming in better than feared, too, most recently with Alphabet (GOOGL) and Microsoft (MSFT) topping estimates after the close on Tuesday despite fears of a cloud slowdown.Still the signs of a slowdown are building with several consumer facing brands relaying a cautious tone for the rest of the year.The results came alongside more bearish sentiment from consumers in the Conference Board's latest survey release.
The Conference Board’s Consumer Confidence Index fell to a nine-month low in April with a reading of 101.3.“While consumers’ relatively favorable assessment of the current business environment improved somewhat in April, their expectations fell and remain below the level which often signals a recession looming in the short-term,” said Ataman Ozyildirim, senior director of economics at the Conference Board.“Consumers became more pessimistic about the outlook for both business conditions and labor markets. Compared to last month, fewer households expect business conditions to improve, and more expect worsening of conditions in the next six months.Josh is a reporter for Yahoo Finance.Click here for the latest stock market news and in-depth analysis, including events that move stocksRead the latest financial and business news from Yahoo Finance
Source : [Consumers hate stocks. That's great news for stocks.](news.google.com/rss/articles/CBMiX2h0dHBzOi8vZmluYW5jZS55YWhvby5jb20vbmV3cy9jb25zdW1lcnMtaGF0ZS1zdG9ja3MtdGhhdHMtZ3JlYXQtbmV3cy1mb3Itc3RvY2tzLTE1MTQzODU2NC5odG1s0gFnaHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvY29uc3VtZXJzLWhhdGUtc3RvY2tzLXRoYXRzLWdyZWF0LW5ld3MtZm9yLXN0b2Nrcy0xNTE0Mzg1NjQuaHRtbA?oc=5) undefined - 100+Yahoo Finance / April 26, 2023