Mr. Market’s obsession with all things Nvidia and its AI stock system is accelerating a growing fear of missing out (aka FOMO) among investors.
That’s the underlying theme of new data from Charles Schwab that has flown under the radar this week, in part due to Nvidia’s post-earnings frenzy.
Charles Schwab’s latest trader sentiment survey reveals that more traders are now more optimistic about the US stock market in the next three months than they were in the second quarter, rising from 32% of respondents to 44%.
The growing optimism reflects a sharp decline in the number of investors who fear recession this year.
Surprisingly, that comes along with more concerns: rising economic risks in China, some red flags from the retail trade, and some general market volatility.
However, dig deeper and you can see FOMO.
Middle-aged and older traders (in theory those with more investable cash) are the most bullish in the market, at 49% to be exact.
Overall, 51% of traders think this is a good time to invest in stocks, mutual funds, and other stock-based investments, even though Treasury yields and other safer money-like investments pay big. This is up significantly from 41% in the second quarter again, despite the fragile markets in August.
“While traders certainly don’t feel like we’re out of the woods yet when it comes to the downturn, we are seeing an influx of cautious optimism,” said James Kostolias, head of trading services at Charles Schwab.
Costolias continued: “This is undoubtedly due to the generally brighter economic picture during the quarter. The job market may be somewhat subdued, but it remains strong, and unemployment remains remarkably low, especially compared to its pandemic-era peaks. Even the latest inflation figures, while indicating a modest rise, are a far cry from the highs seen in 2022. Concerns may remain, but the upside is building.
More quarters and forecasts from the big tech names, backed by Nvidia (which has more chips than we thought!), plus this trader FOMO, could lead to renewed buying power in the markets in September and October.
If Nvidia is the AI leader in the market, things are looking good. Nvidia’s net sales in the second quarter increased 101% from a year earlier to $13.51 billion and earnings per share improved by a staggering 429% year-over-year.
Similar to its stunning forecast for May that rocked Wall Street, Nvidia delivered another stunning forecast, which was higher than the numbers whispered about on Wall Street, sending analyst estimates up sharply. More importantly, it’s better than many of the tech names Nvidia mentioned in its EPS call, like Meta.
More of this the bulls could soon become the dominant force in the broader markets after their summer hibernation, as the data shows.
Brian Suzy He is the Executive Editor of Yahoo Finance. Follow Suzy on Twitter @ Brian Suzy and on linkedin. Tips on deals, mergers, activist positions, or anything else? Email firstname.lastname@example.org.
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