Reuters: NEW YORK According to Goldman Sachs, the significant rise in investor equity allocations to U.S. stocks since the beginning of the year has more opportunity to grow before going above historical norms, indicating that the bull market may still have more gas in the tank.
GS strategists stated in a note on Monday that while cash allocations held by mutual funds remain 50 basis points above their lows from December 2021, representing a potential $49 billion of equity demand, hedge funds’ net leverage exposure to equities remains below the average over the last five years.
The business reported that the amount of margin held by retail traders is currently hovering around its 5-year average and is still far below the peaks seen in March 2018 and October 2021.
The benchmark S&P 500 has increased by more than 14% since the beginning of the year as rising U.S. economic indicators and declining inflation have allayed widespread concerns about a possible recession in the second half of 2023.
With the strengthening economy, investor attitude has changed. According to the AAII attitude Survey, retail investor bullishness reached a 1-year high of 51.4% in the week ending July 19.
The S&P 500’s year-end price objective of 4,500 and its 12-month price target of 4,700 were both maintained by Goldman Sachs.
(David Randall reported; Devika Syamnath edited)