DataTrek survey shows investors bullish on U.S equities, tech names in second half of 2023

According to recent DataTrek survey results, investor sentiment for the second half of 2023 reveals an optimistic forecast for U.S. equities and technology companies.

Participants favored large-cap tech stocks, with Microsoft (NASDAQ:MSFT) leading the list. The majority of participants anticipate the Federal Reserve to maintain interest rates constant and expect stable Treasury yields. Overall, investors are bullish on the U.S. economy and expect oil prices to fall.

Investors may shift capital from bonds to stocks in Q3 and Q4, influenced by a rate hike slowdown and stable Treasury yields. However, market rally longevity depends on broader investor participation, DataTrek’s Nicholas Colas and Jessica Rabe said.

Key findings from the survey include:

S&P 500 Outlook: A plurality of respondents (35%) anticipate that by the end of the year, the S&P 500 (SP500) will remain within +/- 5% of current levels, with 46% anticipating a gain greater than 5% (and 19% expecting a decline of at least 5%).

Preferred Market Cap: 41% of respondents preferred the U.S. big caps, while 27% preferred small caps.

Fed Policy and Interest Rates: Most survey participants believe the Fed will likely maintain rates close to current levels (5%-5.25%) by the end of the year. Market expectations align with Fed Funds Futures, which indicate a high probability of a July rate hike. However, uncertainties remain regarding the future impact of the Fed’s quantitative tightening program.

Top-performing U.S. Large Cap Sector: Large-cap Tech emerged as the clear favorite, with 40% of respondents expecting it to outperform other sectors in the second half of 2023. Energy (12%) was the second most popular choice in terms of 2H performance, followed by Financials (11%) and Healthcare (10%).

Preferred Big Tech Stock: Microsoft leads in preferred Big Tech stocks for the second half of 2023, with 20% of respondents favoring it (likely due to ChatGPT and generative AI). Alphabet (GOOG) (GOOGL), Apple (AAPL), Nvidia (NVDA), and (AMZN) follow closely, with Meta Platforms (META) and Tesla (TSLA) receiving less support.

Perception of a New Bull Market: Respondents divided on whether the U.S. equity market would experience a new bull market in 2024-2025, with 45% believing it is just beginning a secular bull market lasting until 2024 or 2025. The net difference between bullish and bearish comments demonstrates a tight battle between the two camps.

Oil Price Expectations: Oil prices are expected to bottom out, with 46% expecting a price between $70 and $80 per barrel by the end of the year. Oil price stability could revive investor interest in energy stocks.

Dollar Outlook: 48% of respondents predict the dollar will remain stable compared to other major currencies, while 24% anticipate a strengthening.

Economic Recession Probability: The survey results show confidence in the U.S. economy, with 57% of participants anticipating no recession in the second half of 2023.

10-Year Treasury Yield Expectations: It is challenging to predict how the Federal Reserve’s quantitative tightening program might affect 10-year Treasury rates; survey results showed a “near-perfect symmetry” around the current rate of 3.75%.

More on tech stocks:


Now read: Microsoft FQ3 2023 Earnings: The Era Of AI

Continue Reading