US investors are getting more cautious going into year-end. The latest Morgan Stanley Wealth Management Pulse survey puts bearish sentiment at 42%, up 4 points from the previous quarter.
The survey, run by Dynata from October 1 to 23, polled 953 online US investors who manage their own money, delegate it, or both. The margin of error is plus or minus 3.2 points.
Inflation is back on top
Inflation is the number one concern for 54% of respondents, up 2 points. The worry has teeth now. The Fed recently raised rates for the first time in more than three years, and 34% of investors expect another hike at the next meeting, up from 27% last quarter.
Most still feel covered. 86% say their portfolio is well positioned against inflation. That gap between worry and confidence is the interesting part. People expect higher prices and higher rates, yet few think they need to do anything about it.
Midterms and oil
48% are concerned about how the midterm elections could hit the stock market. Geopolitics and oil supply are also on the list, which shows up in where investors want to put money.
Where they see opportunity
Asked about the fourth quarter, investors picked:
- Information technology, 55%, still first on the back of AI
- Energy, 47%, up 4 points, second place
- Health care, 33%, third, mostly for its defensive profile
The ranking tells the story better than the bearish number does. Tech stays on top, but energy is gaining as a hedge against oil shocks and inflation, and health care is there for safety.
Sitting tight
42% plan no changes to their portfolio over the next six months, up from 39%. More bears, yet more people holding still. Chris Larkin, head of trading and investing at E*TRADE from Morgan Stanley, framed it as discipline in a period with no shortage of headwinds.
How to read it
Sentiment surveys like this one are a mood gauge, not a forecast. A 42% bearish reading is notable mainly for direction. Caution is building without panic selling, and the money that does move is shifting toward energy and defensive sectors rather than leaving tech. For a broader read on what higher rates are doing to bank earnings, see the Q3 bank earnings analysis on mediapresser.com.
