Most Investors Join Consumers in Positive Outlook for Year-End

NEW YORK (TheStreet) -- Investors and consumers are finally on the same page: There's plenty of room for optimism.

The folks at Scottrade recently conducted a survey among more than 1,200 clients to take their overall temperature and get a sense about how they're feeling about the market in general. The answer? Not so bad. Despite underperforming equities and some shakiness in Europe, more than half of those surveyed feel that the bull market will continue at least into 2015.

Roughly 92% are optimistic about their investments, and only more so today as compared to earlier this year. A slightly lesser margine, six in 10, are more optimistic about their investments now as compared to six months ago. A third think the Fed will raise interest rates in the next three months and 29% think that the market will avoid a decline of 10% or more until well into 2015.

It's hopeful, but cautiously so. A full 51% believe a market correction will hit before the end of the year, with 27% feeling it's about two months away. That isn't nearly as upbeat as traders were back in March, when 97% of the 1,000 surveyed by Scottrade felt optimistic about their investments, with 47% very optimistic overall. At the time, nearly 94% of survey participants said their financial situations have improved or stayed the same in the past year. They also expected their finances to continue to improve with 70% projecting their financial situations to be "better off" next year.

Still, there's still a whole lot to bolster their good cheer. The Investors Intelligence Sentiment Index, which serves as a gauge for how investors look at their stocks, has hit a 20-year low. Meanwhile, the S&P 500 Volatility Index  (VIX.X) is down almost 10% from 20 years ago and almost 85% from its pre-recession high in October 2008.

That's translating to an overall better mood among the general public as well. The Thompson Reuters/University of Michigan Consumer Sentiment Index unexpectedly rose to 82.5 in August amid a trickle of job gains and U.S. labor returning to the workforce. That was on the high end of analysts' projections and is well above the 64.2 the index was averaging in the year and a half following the last recession.

That's still well short of the 89 the index averaged in the five years leading up to the start of the economic downturn in 2007, but U.S. workers and consumers are still feeling overall better about their current situation. The Michigan sentiment survey’s take on the current condition of Americans' personal finance, rose to 99.8 in August, its highest in seven years, from 97.4 a month earlier.

Even the Conference Board's relentlessly stingy Consumer Confidence Index edged up to 92.4 in August from 90.3 in July. That's still well below the 100 mark it hit just before the recession and nowhere near the 140 in cleared in 2000, but it's the fourth-straight month of improvement from an index that's been climbing back steadily after bottoming out near 30 at the height of the recession in 2009. 

According to the Census Bureau, that helped increase overall U.S. spending in July by 3.7% from the same month last year. The $439.8 billion consumers spent that month. While that isn't exactly spreading evenly -- auto sales were up 6.4% from last year and health and beauty sales rose 7.3% while general items saw more modest 3.4% growth -- it's a step in the right direction.

That's not to say there isn't reason for worry. Instability abroad, troublesome retail performance here at home, a decline in existing home sales from last year, an uptick in foreclosures and a still-massive number of U.S. workers out of the workforce isn't making anyone breathe easy. But a 12.3% increase in new home sales since last year, gradually shrinking unemployment numbers, auto sales and growing retail niches have investors, workers and consumers alike hopeful that even moderate growth can maintain itself into next year.

It isn't overwhelmingly good news, but it's a slight comfort to those who dare to dream.

-- Written by Jason Notte in Portland, Ore. 

>To contact the writer of this article, click here: Jason Notte.

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At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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