Investors are the most bullish on stocks since before the 2022 bear market, says Vanguard

Investors in June said they expected U.S. stocks to return 5.5% in the next 12 months, their most bullish forecast since the 2022 bear market, according to a Vanguard survey.

That is up from a 3.7% expected yearly increase for stocks as of April, and the highest reading since the 6% forecast in December 2021 (see chart). That was roughly a month before the S&P 500 index
SPX,
+0.35%
hit a record high in January 2022, after which time the index fell at least 20% from its peak, meeting the widely held criteria for a new bear market.

“Investors are saying loud and clear that they expect the current stock market rally to continue,” said Tom De Luca, a senior researcher in Vanguard’s Investor Behavior Group. “Right now, short-term optimism is higher than we’ve seen since December 2021, right before the start of the 2022 bear market.”

The survey was based on responses from a random sample of about 2,000 Vanguard personal and 401(k) investors.

The increased optimism comes as stocks have been setting a series of new highs for the year, as a highly anticipated U.S. recession stays at bay, and as most big banks kick off second-quarter earnings with better results than expected.

Of note, the June Vanguard survey also pegged 10-year stock-market returns at 7.1%, the same as in April.

Stocks advanced Wednesday, with all three indexes posting fresh one-year highs. Both the Dow Jones Industrial Average
DJIA,
+0.28%
and S&P 500 ended less than 5% below their January 2022 record closes, according to Dow Jones Market Data. The Nasdaq Composite Index
COMP,
+0.20%
finished 10.6% off its record finish on Nov. 21, 2021.

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