Optimism reigns among advisors with most betting on further S&P 500 gains

The US stock market faced a severe test yesterday, with key benchmarks plunging as investors digested a perfect storm of bearish economic and market headlines.

But notwithstanding all the ugly happenings on August 5^th, a newly released survey suggests advisors are expecting a better picture to emerge over the rest of the year.

The latest InspereX Pulse Survey of 487 financial advisors revealed a predominantly optimistic outlook for the S&P 500 through the end of 2024.

Out of all the respondents, four-fifths (78 percent) said they expect further gains with 43 percent predicting a 5 percent rise, 30 percent forecasting a 10 percent increase, and 5 percent expecting a surge of 20 percent or more.

On the flip side, a minimal 9 percent foresee a potential 10 percent correction, while 1 percent predicted a 20 percent decline. The remaining 12 percent of advisors stood on the fence as they expected the S&P 500 to remain flat.

“The bulls have spoken: they see more upside in the S&P 500 for the rest of the year, which they expect will be exceeded by the Magnificent Seven,” Chris Mee, managing director at InspereX, said in a statement.

Nearly three-fifths of respondents in the survey (56 percent) were of the conviction that the “Magnificent 7” stocks – namely Apple, Amazon, Google parent Alphabet, Facebook parent Meta, Microsoft, Nvidia, and Tesla – will lead the broader market in gains by year-end.

It’s worth noting at this point that InspereX’s survey of advisors from independent broker-dealers, RIAs, banks, regional firms, and wirehouses happened in the week between July 18 and July 15, during which the S&P 500 topped 5,600 to reach an all-time high.

When asked which asset classes they expected to perform well, a strong 82 percent predicted equities will be the top-performing asset class in 2024, with alternatives being a lightyears-distant second at 5 percent.

The survey also revealed a growing unease about market volatility among advisors, who said clients were likewise concerned.

Insperex’s poll found that clients are primarily anxious about market volatility (31 percent), the US presidential election (29 percent) – which will see Donald Trump and Kamala Harris vying for the Oval Office – and inflation (28 percent). Meanwhile, advisors themselves are most concerned with volatility (31 percent), followed by inflation (21 percent) and interest rates (20 percent), while just 9 percent of advisors said they were worried about the upcoming election.

 “[A]dvisor concerns are warranted given the return of volatility in recent sessions, and we know there are additional macroeconomic factors that can lead to further uncertainty,” Mee said.

“All of this means it’s a good time to consider opportunities to stay invested in equities to benefit from the potential upside, while also protecting against downside in case circumstances change quickly. Because we know they can,” he said.