Investors think Trump is better for stocks, CNBC Delivering Alpha survey shows

Former President Donald Trump is the clear favorite when it comes to the stock market, according to the latest results of CNBC’s Delivering Alpha Stock Survey.

Of the 400 investors, traders and money managers polled, 67% said Trump would be better for stocks than President Joe Biden. The S&P 500 rose 68% during Trump’s four years in office versus the 44% gain so far under Biden’s administration. The Nasdaq jumped 137% during Trump’s administration, compared with a 34% gain for Biden three and a half years into his four-year term.

The performance of the Federal Reserve is likely to be a big issue this election season as well as the debate over inflation, and what to do about it. 

Seventy-seven percent of the survey respondents said they trusted the central bank to do right by the American economy, but 23% said they didn’t trust the Fed. Two-thirds said they believe the Fed will cut interest rates before the end of this year, but 23% disagreed, saying there’ll be no cut in 2024. Ten percent of respondents said they would urge the Fed to cut at the next meeting on July 30-31.

The 400 money managers who took the survey were evenly split on where they stand on the direction of the S&P 500 and Nasdaq. A third expect we’ll have a 5% or more drop by autumn. A third said the markets will be up 5% or more by then. And another third said we’re likely to remain range-bound. Both indexes are trading at record high levels, with the S&P 500 up more than 15% since the start of the year, while the Nasdaq has climbed nearly 20%.

A vast majority, some 80%, said they were uncomfortable with how tech heavy the major indexes have become to the point where it makes them nervous.

A big part of those jitters come from Nvidia’s rise. The stock is up more than 150% in 2024, but down about 12% from its 52-week high as of Thursday’s close. The drop was logged all in the last week. 

Seventy percent of CNBC’s respondents said they own the stock. Thirty-nine percent said they will continue to hold it, without buying more for now. Nineteen percent said they’re looking to sell because they’ve made enough money with it, but 13% own it and are buying more after the recent drop. Another 29% said they don’t have it in their portfolios and are looking for other opportunities beyond the chipmaker.

Nvidia, however, is not seen as the best place to capitalize on the potential rise of artificial intelligence. Microsoft is seen as the biggest potential winner, with 50% said they believed it will maximize its return on investment better than any of the other AI players. Alphabet and Apple came in second place, both scoring 13% of the votes, followed by IBM at 11%, Oracle at 7%, and Meta and Tesla each getting 3%.

Big cap tech is seen as the best place to invest right now by our respondents, with 45% of investors saying that’s where they’re putting their money. In second place was energy stocks at 20%, followed by health care at 16%, and the S&P 500 at 13%. Industrials garnered 6% of the responses.

India is the overwhelming favorite for investors when asked which overseas market provided the best opportunity right now, with 39% backing it. Japan was second at 26%, followed by 23% for Europe, 6% for Latin America, and 6% for China.

If you took stocks out of the equation, 35% of respondents said corporate bonds would be their investment of choice. Nineteen percent would keep their money in cash and 16% in U.S. bonds. Some 13% of investors said they would look to gold, while 10% picked private real estate investment and 6% said they would put their money in CDs, under these conditions. None of the respondents chose bitcoin.

Over the last decade, the S&P 500 has compounded at an average annual rate of 13%. Twenty-two percent of respondents expect the S&P 500 will jump more than 10% over the next 10 years. Seventy-eight percent believe it’ll average 5% to 10%. Both numbers are consistent with what investors said last quarter.