A record share of Americans say the stock market boom will continue
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The stock market is soaring. The largest share of Americans on record believe the run will continue.
Why it matters: It's a stark difference from the subdued sentiment about the booming economy.
- When it comes to the stock market, consumers believe high stock prices beget even higher stock prices.
The intrigue: Since 1987 The Conference Board, a business research group, has asked consumers whether they expect stock prices to increase in the coming year.
- In October, more than half said yes — the highest reading in the survey's history.
- About 24% anticipate stock prices will decline, while the remaining 27% expect no change.
What they're saying: "When the stock market increases, we get more people thinking it's going to keep increasing," Stephanie Guichard, a senior economist at The Conference Board, tells Axios.
- "They use the past to predict the future," Guichard adds.
It is a similar story when the stock market declines. In August, weak U.S. jobs data sparked a market sell-off. Consumers thought that would continue.
- "That month we saw a larger share of consumers saying the stock market would decrease. Now those market losses are long gone," Guichard says.
The big picture: The S&P 500 has been on a tear, 22% this year — not far below the all-time high. For context, the index rose 24% in 2023.
- The rally is largely due to a group of headline-grabbing, high-profile technology stocks including Nvidia, the poster child for the expected AI boom.
- The company is up a whopping 180% this year, the biggest gain of the so-called Magnificent Seven.
The other side: As recently as September, a survey by the New York Fed showed the perceived probability of higher stock prices in a year was just 40%.
- The only time that figure topped 50% was in April 2020, as the stock market recovered from its pandemic plunge.
Follow the money: The stock market is volatile; a monthly survey asking consumers how the stock market might perform similarly jumps around.
- "Good months are followed by bad months," says Raul Diaz, an investment officer at Northern Trust Wealth Management. "History has proven that the market, on average, is going to have a positive return."
What to watch: Peak stock market optimism has sometimes — though not always —come before sharp downturns, shifting how consumers perceive what might happen longer-term.
- In January 2000, a then-record share of 48% of consumers said the stock market would be higher in a year. In March, the stock market peaked and the tech crash followed.
The bottom line: No one knows what the stock market will do next — and some closely watched experts expect dismal returns over the next decade. But for now, more consumers are betting that good times are ahead.
