Investors remain bullish with high expectations for the market this quarter

The Trump administration has started at pace, but most investors remain bullish and optimistic, according to a new poll by Morgan Stanley Wealth Management.

The survey of investors was conducted from January 6-16 and found that 58% are bullish, down just a single point from the previous quarter, while 64% are optimistic that the market will be higher by the end of the first quarter.

However, investors remain concerned about inflation’s effect on their portfolio. It’s the top concern at 45% and is in line with the previous quarter as is market volatility at 24%, while 21% cited the new administration, but this was 13-points lower than in Q4, 2024.

Six in ten respondents think the Fed can go ahead with rate cuts but caution has grown on whether the economy is healthy enough for this, with a nine-point decline since last quarter.

Asked about their top picks for stocks by industry, IT (52%), energy (46%), and health care (32%) continue to lead.

“As with any new administration coming in, potential policy changes can cause uncertainty in the markets,” said Chris Larkin, managing director, head of Trading and Investing, E*TRADE

from Morgan Stanley. “That said, investors remain optimistic and resilient amid a soft start to 2025.”

Morgan Stanley’s quarterly retail investor pulse survey included 909 self-directed investors, investors who fully delegate investment account management to financial professionals, and investors who utilize both.

AAII sentiment survey

A separate survey from the AAII conducted last week, painted a less upbeat picture with bullish sentiment declining to just 25.4% of respondents, down more than nine points from the previous week.

Bearishness increased more than three points to 40.2% and neural sentiment was up six points to 34%.

The survey tracks sentiment of investors based on whether they expect stock prices to rise, fall, or be essentially unchanged over the next six months.