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FinanceInvestors fear inflation most in 2022 and see lower stock market returns,...

Investors fear inflation most in 2022 and see lower stock market returns, CNBC survey shows

Traders work on the buying and selling ground on the New York Stock Exchange (NYSE) in New York, December 17, 2021.

Andrew Kelly | Reuters

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Wall Street traders imagine inflation will stay a serious roadblock for the markets in 2022 and shares will solely see muted returns, in keeping with the brand new CNBC Delivering Alpha investor survey. 

We polled about 400 chief funding officers, fairness strategists, portfolio managers and CNBC contributors who handle cash about the place they stood on the markets for the remainder of 2021 and subsequent yr. The survey was performed this week.

More than half of the respondents stated inflation worries them the most about 2022. Thirty % stated the Federal Reserve elevating charges on the fallacious time is a prime concern for them subsequent yr, whereas 17% stated the pandemic and its financial influence is the largest fear.

For months, traders have watched quite a lot of inflation knowledge factors present their highest ranges in many years. The consumer price index, which measures the price of a wide-ranging basket of products and companies, surged 6.8% on a year-over-year foundation in November, hitting the quickest charge since June 1982.

The Fed signaled it would make aggressive coverage strikes in response to rising inflation, together with accelerating the discount of its month-to-month bond purchases. Fed officers additionally see as many as three charge hikes coming in 2022.

“There are serious headwinds to worry about,” Brad McMillan, chief funding officer at Commonwealth Financial Network, stated in a notice. “Inflation is at the highest level in decades. Supply chain problems seem to be insoluble. If these issues keep getting worse, they could derail the recovery.”

The S&P 500 has rallied over 27% this yr to a file excessive because the market climbed a wall of fear from surging inflation to the continued pandemic to the rollback of financial stimulus. For 2022, traders suppose positive factors shall be a lot lower.

More than 50% of the survey respondents anticipate the S&P 500 to go up lower than 10% in 2022. Nearly 18% suppose the market will produce one other double-digit yr, whereas 10% of the members suppose shares shall be flat subsequent yr.

Among totally different asset lessons, equities are nonetheless traders’ best choice for 2022, in keeping with the survey consequence.

“While inflation is a concern and source of volatility, it also makes stocks the most compelling choice among the major asset classes,” Tony DeSpirito, chief funding officer of U.S. basic energetic fairness at BlackRock, stated in a notice. “Individual companies will manage through differently, highlighting the importance of a stock-by-stock approach.”

In phrases of stock preferences, 35% of the respondents stated they favor financials and 27% like cyclical names benefiting from the financial restoration. Technology shares in normal grew to become much less favorable amongst traders in 2022, although they nonetheless managed sizeable positive factors.

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