This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
Mr. Market's obsession with all things Nvidia and its AI stock ecosystem is throwing accelerant on a growing fear of missing out (aka FOMO) among investors.
This is the underlying theme of new data from Charles Schwab that flew under the radar this week, in part due to Nvidia post-earnings madness.
The latest Charles Schwab Trader Sentiment Survey revealed that more traders are now more bullish on the US stock market in the next three months than they were in the second quarter, growing from 32% of the respondents to 44%.
The increased optimism reflects a sharp drop in investors fearing a recession this year.
Surprisingly it comes alongside more worries: growing China economic risk, some red flags from retail, and some general market chop.
Nevertheless, dig deeper and you can see the FOMO.
Mid-life and older traders (theoretically those with the most investable cash) are the most bullish on the market, 49% to be precise.
Overall, 51% of traders think it's a good time to invest in stocks, mutual funds, and other equity-based investments, despite Treasury yields and other safer cash-like investments paying big. That's up noticeably from 41% in the second quarter again, despite shaky-looking markets in August.
“While traders certainly don’t feel we’re entirely out of the woods yet when it comes to an economic downturn, we’re seeing an influx of cautious optimism,” said James Kostulias, head of trading services at Charles Schwab.
Kostulias continued: “This is no doubt thanks to a sunnier economic picture overall this quarter. The jobs market may be cooling somewhat, but it continues to be strong, and unemployment remains remarkably low, especially compared to pandemic-era highs. Even the most recent inflation numbers, while they do indicate a modest rise, are a far cry from the highs we saw in 2022. Concerns may remain, but bullishness is on an upswing.”
More quarters and outlooks from big tech names, powered by Nvidia (which has more chips than we thought!), as well as this trader FOMO, may lead to renewed buying strength in markets in September and October.
If Nvidia is the market's AI bellwether, things look good. Nvidia's second quarter net sales surged 101% from the prior year to $13.51 billion and earnings per share improved a staggering 429% year on year.
Similar to its mind-blowing May outlook that rocked Wall Street, Nvidia served up another eye-popping forecast, one that was even higher than the numbers whispered about on Wall Street, that is sending analyst estimates sharply higher. And critically, higher for a lot of tech names Nvidia mentioned on its EPS call, such as Meta.
More of this and the bulls may soon become more of the dominant force in the broader markets after a summer slumber, as the data shows.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance