{"id":13615,"date":"2025-01-08T14:36:40","date_gmt":"2025-01-08T14:36:40","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13615"},"modified":"2025-01-08T14:36:40","modified_gmt":"2025-01-08T14:36:40","slug":"positive-consumer-and-investor-sentiment-and-the-market-ahead","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/positive-consumer-and-investor-sentiment-and-the-market-ahead\/","title":{"rendered":"Positive Consumer And Investor Sentiment And The Market Ahead\u00a0"},"content":{"rendered":"\n<p><em>Michael D. from Camas, WA asks: <\/em>Happy New Year, Mitch. When evaluating my investment positioning, I tend to look at fundamentals, sentiment, and technical factors. My question for you is regarding sentiment\u2014do you think the positive swing in consumer and investor sentiment is a warning sign, i.e., getting a little detached from reality?<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for writing, Michael, and Happy New Year to you as well.<\/p>\n\n\n\n<p>Let\u2019s start with consumer sentiment, which has experienced a solid uptick in recent months according to the University of Michigan\u2019s consumer sentiment index. In November, the index surged from 71.8 to 74.0, and a strong holiday shopping season suggests that American households ended the year feeling confident.<sup>1<\/sup><\/p>\n\n\n\n<p>However, reading into the data a bit more closely reveals a few key takeaways. The first is that sentiment surged along party lines \u2013 Republicans largely reported feeling very optimistic about economic prospects looking ahead, while sentiment declined for Democrats. This pattern lines up with what we\u2019ve seen in past elections, so no real surprise here.<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\">Guard Your Retirement Against Market Volatility in 2025<\/a><\/u><\/strong><\/p>\n\n\n\n<p>As consumer sentiment shifts and political divides impact economic outlooks, many investors are wondering how to secure their retirement. With market fluctuations ahead, it\u2019s essential to have a strategy that accounts for these uncertainties.<\/p>\n\n\n\n<p>Our free report, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\">How Solid Is Your Retirement Strategy?<sup>2<\/sup><\/a><\/u><\/em><\/strong>, reveals key strategies to safeguard your retirement from volatility and shifting sentiment.<\/p>\n\n\n\n<p>In this report, you\u2019ll find:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importance of flexible portfolio allocation<\/li>\n\n\n\n<li>Why keeping some liquid assets can potentially help you preserve more wealth<\/li>\n\n\n\n<li>Understanding your risk tolerance in case of a market downturn<\/li>\n\n\n\n<li>Plus, more strategies to help you protect your retirement assets<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide by clicking on the link below.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\"><u>Get our FREE guide: How Solid Is Your Retirement Strategy?<\/u><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\">2<\/a><\/sup><\/p>\n\n\n\n<p>Another takeaway is that many consumers appeared to be pulling forward purchases in anticipation of price increases in the future. The uncertainty of tariffs is a key driver, which may actually suggest a more cautious\u2014as opposed to euphoric\u2014positioning for U.S. households. Indeed, if you zoom out to look at where sentiment is historically, it\u2019s still relatively low (see chart below). High borrowing rates and the lingering sting of inflation are likely to keep consumers \u2018anchored to reality,\u2019 if you will, and I don\u2019t see these factors changing much in 2025.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"347\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-1024x347.png\" alt=\"\" class=\"wp-image-13616\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-1024x347.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-300x102.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1-768x260.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2025\/01\/pic1.png 1320w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>3<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p>On the investment and Corporate America side of the sentiment equation, there\u2019s evidence that sentiment has firmly drifted into \u2018optimistic\u2019 territory. A recent survey of 1,000 retail investors found that 60% were optimistic about their portfolio, while only 15% were pessimistic. CEOs are also feeling quite confident\u2014a Deloitte survey found 84% of CEOs either optimistic or very optimistic about their company\u2019s performance in 2025. The reasons given were ones we\u2019ve highlighted before, i.e., deregulation, fiscal stimulus, and increased capital markets activity.<\/p>\n\n\n\n<p>It is this investor and business sentiment that should be an area of focus for investors in the new year, in my view. Stocks tend to rally when economic realities exceed expectations. If the bar is set too high for earnings, profitability, and economic growth, it raises the probability that companies and the U.S. economy could fall short. And that tends to be the recipe for downside volatility.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Investor optimism is high, but when expectations are set too high, downside volatility becomes more likely. With the market at new highs and so many unknowns ahead, it\u2019s crucial to have a strategy that accounts for these uncertainties.<\/p>\n\n\n\n<p>Get our free guide, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2025_01_09&amp;content=retirement_strategy_guide\">How Solid Is Your Retirement Strategy?<sup>4<\/sup><\/a><\/u><\/em><\/strong>, and learn how to build a &#8220;weatherproof&#8221; retirement plan. In this report, you\u2019ll find:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importance of flexible portfolio allocation<\/li>\n\n\n\n<li>Why keeping some liquid assets can potentially help you preserve more wealth<\/li>\n\n\n\n<li>Understanding your risk tolerance in case of a market downturn<\/li>\n\n\n\n<li>Plus, more strategies to help you protect your retirement assets<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, this guide will help you protect your nest egg from potential market storms.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consumers, investors, and CEOs generally feel good about the economy and market. Is this a good or bad omen for stocks?  <\/p>\n","protected":false},"author":3,"featured_media":13575,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-13615","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13615","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13615"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13615\/revisions"}],"predecessor-version":[{"id":13617,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13615\/revisions\/13617"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13575"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}