Investor sentiment among Ally Invest customers has turned much more negative compared with the previous quarter. According to the in-house survey conducted at the end of March, the bullish/very bullish sentiment dropped to 30% this quarter from 76% just three months earlier. This suggests that investors expect a slowdown of the bull market that started 2018 in its ninth year, Ally Invest said in a press release announcing results of the survey.
What's more, clients of Ally Invest, the discount brokerage under Ally Financial Inc. (ALLY), appear to be losing their enthusiasm for the FAANG stocks – or Facebook, Inc. (FB), Amazon.com, Inc. (AMZN), Apple Inc. (AAPL), Netflix, Inc. (NFLX) and Google parent Alphabet Inc. (GOOG). The majority of those polled said they think Facebook will report an earnings disappointment, while they believe that Amazon should exceed Wall Street's views. Both are slated to report first quarter earnings later this month. Facebook is scheduled to weigh in with quarterly results on April 25, while Amazon is on tap a day later.
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"Investor sentiment deviated from the last two quarters, showing significantly weakened confidence in Facebook and Apple, while strong bullish sentiment remains steadfast for Amazon and is on the rise for Netflix and Google," wrote Ally Invest in the news release highlighting the results of the survey.
Of the investors surveyed, 27% still have a bullish market outlook compared with 61% in Ally's previous quarterly survey. What's more, 3% are very bullish, which is down from 15% sequentially. Bearish sentiment increased to 24% from just 3% in the previous quarter. Among the things investors are paying attention to, Ally Invest found that 74% are awaiting corporate earnings, while 55% think tax reform will be a key driver of stocks. What's more, 59% cited concerns about the U.S. political environment and the impact it can have on stocks, while 55% think the market could be overvalued and 49% are concerned about rising interest rates. In the previous quarter's survey, most investors were worried about unrest internationally, a weakening U.S. dollar and slowing year-over-year growth.
Ally Invest isn't the only discount brokerage to see customers grow more bearish in recent weeks as worries about a trade war, rising interest rates and geopolitical unrest continues to grow. TD Ameritrade, the Omaha, Nebraska-based online brokerage, announced this week that its Investor Movement Index (IMX) dropped 12% in March, hitting its lowest point in close to two years as the stock market remains volatile, with fears over a trade war ebbing and flowing based on the President's tweets. According to TD Ameritrade Holding Corporation (AMTD), its IMX – a proprietary, behavior-based index created by the company to gauge what investors are actually doing – came in at 5.22, lower than the 5.95 reading in February and down for the third month in a row.