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Americans have rarely been this giddy about the stock market.
They are piling into stocks as major indexes reach new highs and placing bets that the rally that has driven the S&P 500 up 18% this year has more room to run.
The surging stock market has minted millionaires and helped send many Americans’ net worth sharply higher. As of the second quarter, the number of 401(k) retirement accounts at Fidelity Investments worth at least $1 million reached around 497,000, according to the firm. That is up 31% from a year ago and a record high.
U.S. households’ stock allocations have steadily inched up this year, according to JPMorgan estimates, and recently accounted for around 42% of their total financial assets. That is the most on record in data going back to 1952.
And investors are still feeling good about the market. At a time when many people have been stung by higher prices for eggs, bread and other household staples, the stock market has offered a real-time barometer of their rising wealth. The S&P 500 has hit more than three dozen fresh records this year, on pace for the most in a calendar year since 2021.
That has delighted those who have taken a peek at their portfolios.
“Was just going through my 401k and HOLY HELL what a God Send,” wrote Steve Ethridge on social-media platform X this month.
The 51-year-old said he has been steadily investing for years and poured more cash into the market over the past one after landing a raise at work.
The steady gains in his stock portfolio have made him feel better about his money than he has in a while. He isn’t too concerned about the recent market volatility.
“I do feel better off than I did a few years ago,” Ethridge said.
He isn’t alone. One measure of bullish sentiment among investors is hovering around its highest levels of the past year, according to the American Association of Individual Investors.
Of course, some investors see reasons to be cautious. September is often one of the most volatile months for markets, and turbulence could pick up around a contentious presidential election that has already been full of surprises.
Others remain on edge that technology behemoths loom so large over the market and worry that hype around artificial-intelligence has gone too far. Nvidia’s latest earnings results beat expectations. But its stock still sank the next day, a sign of how high the bar has risen for the chip maker.
In early August, stocks suddenly dropped over anxiety about the health of the U.S. economy and the unwinding of a popular trade tied to the yen. The dip proved to be short-lived, though, showing how eager investors are to keep pouring money into the market.
Investors have been reassured in recent weeks by data showing the economy is still humming along and Federal Reserve Chair Jerome Powell’s signals that an interest-rate cut is just a few weeks away. A September cut would be the first since the central bank’s aggressive rate-hiking cycle started more than two years ago.
Even during the brief turmoil in early August, investors kept buying stocks. U.S. equity funds drew inflows for eight consecutive weeks through late August, according to EPFR data.
Funds tracking smaller companies, which tend to be most sensitive to the economy’s ups and downs, have been a particular bright spot. Small-cap funds drew $12.7 billion of inflows in July. That surpassed the prior monthly record set in November 2020, when the U.S. economy was in the early stages of its recovery from the Covid-19 crash.
The buying has helped drive a speedy rebound in the Nasdaq Composite and other major indexes. A correction for the Nasdaq, defined as a drop of more than 10% from a recent high, lasted 11 trading days, the shortest such pullback since October 2011. The index is now off 5% from its high, while the S&P 500 is 0.3% from its record.
“This melt up is exactly what any investor should be waiting for,” said William Bohrod, a 67-year-old dentist in Springfield, N.J. “The most conservative approach is ‘all in, all the time.’”
Bohrod said the big stock gains in recent years have helped him pay for a boat at his vacation house on the Jersey Shore. He is optimistic about the market and doesn’t plan to touch any of his holdings.
Professional investors have also embraced the rally. Net bullish bets tied to S&P 500 futures by asset managers rose in July to the highest level since 2020, according to Commodity Futures Trading Commission data, and have remained elevated.
“We’re bullish, and to our clients we say now is an opportune time to invest,” said Thorne Perkin, president at Papamarkou Wellner Perkin, a multifamily office.
Write to Gunjan Bane
