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PNC/CivicScience Index Reports Another Month of Rising Investor Confidence

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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-CS Investor Sentiment Index (ISI) rose in January 2018, reflecting the fourth straight month of upward movement of the index, as optimism is seemingly spilling into the new year. The trend of investor confidence as measured by the poll picked up momentum in the latter months of 2017 and now into 2018.

Sentiment began moving higher in October and reached its highest level for 2017 in December. January 2018’s reading represents another move higher, as the ISI rose to 55.1, up from 54.3 in December. In general, growing optimism appears to reflect macroeconomic factors which indicate continued global growth, in addition to the strong financial markets. In December, the U.S. Congress passed the 2017 Tax Cuts and Jobs Act, which could unlock significant capital for corporations in the form of lower tax expense among other benefits. This has been viewed as a positive for earnings growth in 2018 and is helping fuel momentum in markets.

Volatility remains low by historical standards thus far in 2018 after last year’s record low levels. History would indicate volatility is likely to rise from these low levels, particularly in response to market-moving headlines, uneven economic data, unforeseen geopolitical events, or other uncertainty. U.S. financial markets shrugged off risks in January 2018 to post strong positive returns for the month. The economy continues along a path of economic expansion, even with the first look at fourth-quarter 2017 GDP slowing to 2.6% from the prior 3.2%. The job market remains on solid ground, with the unemployment rate holding at 4.1% for December. As expected, the Federal Reserve (Fed) kept interest rates unchanged in January 2018, a meeting which marked Chair Janet Yellen’s last, as the helm is turned over to Jerome Powell. Domestic stocks have benefited from continued optimism and strong fundamentals with corporate earnings and moved higher in 2017. Currently, consensus estimates for 2017 earnings growth for the S&P 500 are just slightly above 10% year over year. Fourth-quarter 2017 earnings season began in January 2018, and thus far many reporting firms have booked large one-time expenses associated with tax reform compliance.

 

Check out the full reading.

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