President Donald Trump has said repeatedly that if the Federal Reserve Board would drop interest rates considerably, the stock market numbers would rise considerably beyond their current record levels.
Apparently, a majority of investors believe the stock market will continue to rise despite any Federal Reserve decisions.
In July, when all three major stock indices – the Dow Jones Industrial Average, the S&P 500 and the NASDAQ – all reached record highs, Spectrem surveyed investors to see just how high they believe the market will go through the rest of 2019. At the time of the survey, the Dow Jones had topped 27,000 for the first time, so investors had that number in their sights as they made their decision.
On August 5, trade negotiations with China hit a key snag over the devalued yuan, and the DJIA lost more than 800 points to sit below 26,000 at the close of business that day.
In the late July poll, Investors were given choices ranging from 30,000 and above down to below 18,000, in 1,000-point increments. Well over half (59 percent) said the Dow Jones would sit above 27,000 on Dec. 31, 2019. That includes 30 percent predicting above 28,000, 10 percent predicting above 29,00 and 5 percent predicting it would be above 30,000 by the end of the year.
For comparison sake, when Spectrem asked the same question of investors in February of 2019, only 22 percent suggested the Dow Jones could be above 27,000 by the end of the year. At that time, the DJIA was hovering around 26,000.
Among investors who consider themselves to be very knowledgeable about investing and finance, the optimistic percentages from July 2019 were even higher, with 68 percent predicting the Dow Jones would be above 27,000 by year’s end and 34 percent predicting it will be above 28,000.
Investors who lean Republican were obviously more optimistic than those who lean Democratic, but even 57 percent of Democratic investors predicted the market will sit above 27,000 on Dec. 31, 2019.
Optimism reigns among wealthy investors, apparently. Pessimism, at least as it relates to the Dow Jones Industrial Average, has little influence among those investors.
Considering 25,000 as a negative benchmark, 16 percent of wealthy investors believe the Dow Jones will sit below 25,000 at year’s end, and 11 percent see the DJIA sitting below 23,000 at that time. A drop to 23,000 from 27,000 would be a 15 percent decrease and would perhaps trigger a volatile selloff.
©2019 Spectrem Group
Keywords: stock market, dow jones, NASDAQ, S&P 500, investors, advisors, Spectrem, hot topic