Sentiment among traders on the outlook for the U.S. stock market has soured, leaving meme stocks “out” and value stocks “in,” according to Charles Schwab’s latest quarterly survey.
Traders have grown “bearish,” said Barry Metzger, head of trading and education at Charles Schwab, in a media briefing ahead of the release of the survey’s results. Bearish sentiment evident in the first quarter deepened in the fourth quarter this year, the firm found. Traders in October reported being bearish on international stocks, cryptocurrencies and meme stocks, Metzger said. “Engagement with crypto meme stocks is at a particular low that we’ve seen all year.”
Still, traders “have their eyes open on a few different sectors and categories” that they feel are poised to do well, said Metzger. For example, they are bullish on value stocks and fixed income, as well as the energy, healthcare, utilities and consumer-staples sectors, he said. Meanwhile, traders will be listening for hints about the Fed’s potential path of rate hikes from Fed speakers who are voting members of the Federal Open Market Committee, said Shawn Cruz, head trading strategist at TD Ameritrade, during the media briefing. Cruz also pointed to economic data that he expects traders will likely focus on, such as the producer-price index for a gauge on wholesale inflation, and readings from the purchasing managers’ index, known as PMI.