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:
The PNC-CivicScience Investor Sentiment Index (PNC-CS ISI) shifted higher in May, reflecting an improvement in investor confidence. Investor optimism, as measured by the poll, had been steadily rising from September 2017 through January 2018. After peaking in January, sentiment began to fade, and declined in each of the next three consecutive months. May’s reading reflects a reversal, with slightly more positive results. May 2018’s poll results reflect a more optimistic view from participants than in the prior two months. The PNC-CS ISI rose to 51.2 in May from 48.8 for April. Considering the financial markets, volatility further eased through much of May; however, levels are still elevated versus 2017. May headlines continued to reflect uncertainty of United States/China trade tariff negotiations and geopolitical concerns over North Korea. However, fundamentals remain sound as the U.S. economy continues to expand and corporations report robust profit growth. U.S. financial markets began 2018 on a strong note after tax reform legislation was passed in late 2017. But 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; since U.S. equities had gone longer than normal without having had any type of correction, a 10% correction was not unwarranted. Stocks have recovered some of what was lost, and markets are back in positive territory for the year, with the S&P 500 up 1.2% on a year-to-date basis through May 31, 2018. Including the reinvestment of dividends, the S&P 500 total return is 2.0%. First-quarter 2018 earnings season concluded in May, with the majority of S&P 500 companies exceeding analyst expectations. The blended earnings growth rate of 24.6% was higher than the initial estimate of 17.1% and is the strongest rate of growth in more than seven years. Profit margins are at record levels.
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