Retail investors are holding onto optimism even as market risks multiply, according to Morgan Stanley’s latest Wealth Management Pulse Survey.
More than half of respondents (55%) said they remain bullish in the second quarter, only marginally lower than 56% in the prior quarter, signaling that confidence has largely held steady despite a more uncertain backdrop.
At the same time, investors are becoming more attuned to emerging risks layered on top of persistent inflation pressures. Half of those surveyed (50%) continue to cite inflation as their primary concern. However, anxiety around geopolitical conflict has climbed sharply to 20%, up from 12% in the first quarter, while concerns tied to rising energy costs have also increased to 18% from 12%.
Expectations for market turbulence are also building. Roughly 63% of investors anticipate volatility will increase in the near term, a seven-percentage-point jump from the previous quarter.
Political uncertainty is adding another dimension to investor unease. Nearly half (48%) said upcoming midterm elections could influence stock market performance.
Despite these headwinds, investors are not retreating. Instead, engagement levels are rising, with 50% reporting they are spending more time managing their portfolios this quarter, compared to 41% previously.
“With geopolitical concerns, policy uncertainty and higher costs, market whiplash is very real, making day-to-day moves feel noisy,” said Chris Larkin, Managing Director and Head of Trading and Investing at E*TRADE from Morgan Stanley. “But rather than pull back, many investors remain engaged—adjusting to volatility and looking for opportunities in a more complex market backdrop. A healthy dose of volatility is a normal part of market dynamics, and commitment to an investing plan is key.”
Sector preferences reflect both growth opportunities and defensive positioning. Information technology continues to lead, with 56% of investors identifying it as the sector with the most potential, driven in part by ongoing developments in artificial intelligence. Interest in energy remains unchanged at 49%, even amid elevated oil prices, while healthcare is gaining traction, rising two percentage points to 35% as investors look for stability.
The survey was conducted between April 1 and April 20, 2026, among 940 US investors with varying levels of assets and investment approaches. It carries a margin of error of ±3.20% at a 95% confidence level and was administered by Dynata.
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