Anika Begay
With a weak inflation report giving markets a boost Tuesday, a new survey finds investors are betting big that the Federal Reserve will embark on a series of interest rate cuts that will revive the economy and reignite a market rally that took a hit in early August. Ninety-three percent of money managers in the survey expect lower short-term rates in the next 12 months, marking the highest percentage in 24 years, BofA said. Investors also now believe the central bank needs to cut rates more aggressively to ensure a soft landing with 60% seeing four or more cuts in the next 12 months, according to BofA chief investment strategist Michael Hartnett, who compiled the report. The survey results came after a rapid market plunge last week, sparked by recession fears in the wake of a disappointing jobs report. The stock market quickly recovered most of its losses in the days that followed, and another inflation report on Wednesday could determine whether the gains continue. Futures markets have fully priced in a rate cut at the Fed’s September meeting, but it’s neck and neck whether it will be a quarter-point or half-point cut. .SPX YTD Mountain S&P 500 Only 31% of fund managers are overweight stocks now, down from 51% in July, the survey showed. Meanwhile, investors slightly increased their cash holdings to 4.3% in August from 4.1% last month. They are reducing their risk as concerns about the economy mount. Global growth expectations are at an eight-month low with about half of respondents expecting weaker growth over the next 12 months, the survey showed. However, most investors (76%) expect the Fed to stage a soft landing, up from 68% last month, the survey said. BofA’s August survey captured the sentiment of 220 respondents with $590 billion in assets under management.
in Business
Investors are counting on the Fed to save stocks and the economy, Wall Street survey shows
