U.S. investors are more bullish on stocks than at any time in last 2 years, Vanguard survey finds

That level was more than double their expectation of 2.7% for 2023, as reported in December 2022. Investors’ heightened optimism was on par with the positive outlook for stocks expressed in December 2021, when investors anticipated a 6% stock market return for 2022.

Of course, stocks fared far worse in 2022 than investors had expected, with the S&P 500 finishing the year down 19.4%, its worst calendar-year showing since 2008, according to FactSet data.

“Investors are brimming with confidence going into 2024,” said Xiao Xu, an analyst in Vanguard Investment Strategy Group. “Their optimism about the stock market has hit its highest level in two years, following the recent surge in U.S. equities.”

Meanwhile, investor expectations for stock returns over the next 10 years rose slightly to 7.2%, which was higher than Vanguard’s 10-year forecast, which ranges from 4.2% to 6.2%.

Investors’ surveyed in December also expressed rosy views on the U.S. economy, After holding steady for much of the year, investors expectations for GDP growth over the coming three years surged to 3.5% in December, among the highest levels ever recorded by the Vanguard survey, which has been conducted every other month since February 2017.

While investors expectations for growth over the short term surged late last year, the survey found that over the long term, it only ticked higher.

The S&P 500
SPX
gained 8 points, or 0.2%, on Friday, leaving it on track for a sixth-straight record close at around 4,903. Meanwhile, the Dow Jones Industrial Average
DJIA
gained 117 points, or 0.3%, to 38166, while the Nasdaq Composite
COMP
gained 13 points, or 0.1%, to 15,524.