The PNC-CivicScience Investor Sentiment Index (“ISI”) is a “living,” survey-based measurement of U.S. adults’ current attitudes and expectations related to the U.S. financial markets, investment climate, and market outlook. The primary goal of the ISI is to monitor changes in consumer and investor attitudes, to better anticipate investment trends, market movements, and overall U.S. economic health.
A Snippet of Our Latest Reading:
For April 2018 the PNC-CivicScience Investor Sentiment Index (ISI) continues to trend lower, reflecting weakening investor confidence. Investor optimism, as measured by the poll, had been steadily rising from September 2017 through January 2018. After sentiment in January reached the highest level reading since the poll began in November 2016, February’s results reflected a shift in expectations. April’s reading reflects the third consecutive month of softening confidence. U.S. financial markets began 2018 on a strong note after tax reform legislation was passed in late 2017. Volatility returned to the markets in February after an extremely sanguine 2017. A number of uncertainties had markets trading lower, and the S&P 500® fell through a 10% correction point. It is normal for stocks to experience declines from time to time, and U.S. equities had gone longer than normal without having had any type of correction. In our view, a 10% correction was not unwarranted based on historical data provided by Ned Davis Research. Since then, stocks have recovered some of what was lost, while on a year-to-date basis the S&P 500 is down less than 1%. April 2018 poll results further highlighted a more cautious view and is the first month the ISI dipped below a reading of 50. The ISI declined to 48.8 in April from 50.4 for March. Looking at the financial markets, while volatility eased as the month of April progressed, levels are still elevated versus 2017. April headlines included worries over the potential of trade wars, given U.S./China trade talks, as well as geopolitical concerns surrounding Syria and North Korea. Fundamentals remain solid, and the beginning of first-quarter 2018 earnings season reflected optimism for profit growth by U.S. corporations. First-quarter 2018 earnings season commenced in mid-April, and the majority of companies in the S&P 500, that have reported to date, are exceeding expectations. According to FactSet Research, the blended earnings growth rate with more than half of S&P 500 firms having reported has risen to over 23.0%, up from the initial estimate of 17.1%, and if realized would be the strongest rate of growth in more than seven years.