BofA: investor optimism ahead of 2026 hits highest in nearly five years
Periods of such rosy market expectations have been seen only eight times in the 21st century
Sentiment among asset managers has soared to its highest level in years, a December Bank of America survey showed. Professional investors have virtually stopped fearing a recession and are building portfolios in anticipation of a continued rally.
Details
The composite index, which takes into account cash levels, the share of stocks in portfolios and global growth expectations, reached 7.4 out of 10 in December, the most bullish result in BofA's monthly surveys in 4.5 years, Bloombergwrites. The combined exposure to stocks and commodities, which typically rise on an economic rebound, hit a new high since February 2022, the period before a pandemic-induced inflation shock and a sharp rise in interest rates.
According to BofA strategist Michael Hartnett, this level of optimism has been recorded only eight times this century. These periods include the recovery from the global financial crisis (November 2010 to February 2011) and the post-quantum boom (November 2020 to July 2021). A December BofA survey found that 57% of fund managers expect a "soft landing" for the global economy - inflation returning to target without slipping into recession. The opposite outcome is predicted by the lowest number of respondents in 2.5 years - only 3%.
Context
A Bloomberg survey of fund managers in the U.S., Europe and Asia showed that they are positioned for further strengthening of the stock market in 2026. Exchange analysts share this optimism: Morgan Stanley, Deutsche Bank, Citigroup and other investment banks forecast a rally in U.S. stocks of more than 10%, the agency notes.
The record base benchmark for the U.S. S&P 500 index for 2026 so far belongs to the investment company Oppenheimer. Its strategist John Stoltzfus expects the key indicator of the U.S. stock market to reach 8,100 points by the end of next year - 19% above the current level. Fundstrat Global Advisors co-founder Tom Lee, one of the most accurate forecasters on Wall Street, believes the S&P 500 will meet 2027 at 7,700 points.
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