Investor confidence is slipping as market conditions remain volatile, according to a new study from Wells Fargo. According to the Wells Fargo/Gallup Investor Optimism Index, U.S. investor optimism fell to its lowest point since the fourth quarter of 2016 as investor confidence weakened in the 12-month outlook for the stock market and U.S. employment.
The Q3 2019 Wells Fargo/Gallup Investor and Retirement Optimism Index is now 72, down 13 points from 85 in the second quarter and well below the post-recession high of 117 reached in the fourth quarter of 2017, the largest quarterly drop for the index in more than three years.
“Even before the volatility of the past two weeks, investors were rattled by the market decline at the start of the month, including a nearly 800-point drop in the Dow at the start of the survey period,” said Andy Byer, head of Client Service and Advice for Wells Fargo Advisors on Business Wire.
A major factors influencing investor decision is the U.S.-China trade war. According to a survey from SophisticatedInvestor.com, 45.8% of investors citing it as their top concern. The trade wars are twice as important as the national debt and significantly higher than interest rate cuts from the Fed. Other factors of concern to investors include tensions in the Persian Gulf.
Wells Fargo’s index notes that 59% of investors this quarter said this was a good time to invest in the stock market, down from 65% last quarter. However, 76% saying they feel very confident or somewhat confident they will have enough money to maintain the lifestyle they want throughout their retirement.
“With the market still up from the start of the year, recent market losses have not cut into investors’ underlying confidence in their portfolio or long-term retirement goals,” Byer said. “Even with volatile markets, investors should keep their focus on their long-term investment plans. And making sure investments are aligned with their personal risk tolerance and rebalancing portfolios to match their investment objectives.”