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Investor Survey Shows Bullish Sentiment On The Rise, But Not For FAANG Stocks

Wayne Duggan

Ally Financial, Inc. (NYSE: ALLY) recently released the results of its quarterly survey of more than 300 independent investors. The survey is an important litmus test for investor sentiment for the quarter ahead. With the SPDR S&P 500 ETF Trust (NYSE: SPY) already up 17.2 percent year-to-date, the investors surveyed are optimistic the market strength will continue.

"The results of our Q2 outlook survey indicate that many investors view a few major issues, such as Brexit and slowing corporate growth, as either already built into the market or not threatening enough to limit their opportunities," Ally Invest president Lule Demmissie said.

Ally found interest in the popular FAANG group of stocks, Facebook, Inc. (NASDAQ: FB), Apple, Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Netflix, Inc. (NASDAQ: NFLX) and Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), has declined in the past three months.

Survey Says...

Here are some of this quarter’s major findings in regards to the overall market:

  • Bearish sentiment among investors dropped from 47 percent in the first quarter survey to just 20 percent in the second quarter survey.
  • Bullish sentiment doubled to 35 percent compared to the beginning of the year.
  • Respondents named unchanged interest rates and economic trade agreements as the two biggest reasons for their bullish outlook.
  • Despite the bullish shift in investor sentiment, at least half of investors still see a potential recession (62 percent), negative international trade news (52 percent) and the tumultuous U.S. political environment (50 percent) as near-term threats to the stock market.
  • Only 25 percent of respondents said Brexit is a potential issue for investors.

Coincidentally, the S&P 500 closed Tuesday at a new all-time high of 2,933.68.

Enthusiasm for FAANG stocks dropped from 44 percent in the first quarter to 35 percent in the second quarter, down from 41 percent a year ago.

  • Despite the decline in interest, most investors expect the FAANG group to meet or exceed investor expectations in the second quarter.
  • Investors are most bullish on Amazon, with 65 percent expecting the company to meet or exceed expectations.
  • Investors also expect Google (57 percent), Netflix (53 percent) and Apple (53 percent) to meet or exceed expectations this quarter.
  • Investors remain cautious on Facebook, with only a third (33 percent) expecting the stock to meet or exceed market expectations.

Traders will get a chance to see how accurate the Ally survey is when the FAANG stocks report first-quarter earnings on the dates below:

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