UBS/Gallup Index of Investor Optimism - News Alert
www.ubs.comSix in Ten Investors Say Their Local Real Estate Markets Are Getting Worse
NEW YORK, October 23, 2006 – Investor optimism rose for the second month in a row in October according to the UBS/Gallup Index of Investor Optimism. The Index increased five points in October following its 21 point increase in September and now stands at 79 – its highest level in seven months and 26 points higher than its low point for the year in August. The Index is conducted monthly and had a baseline score of 124 when it was established in October 1996, exactly ten years ago to the month.
Investors are feeling more bullish on the stock market than in previous months. In October, 53 percent of investors said that they are optimistic about the performance of the stock market, up from 47 percent who held that view in September and 42 percent in August. Additionally, the percentage of investors who believe that now is a good time to invest in the financial markets has steadily increased sinceJuly and is now at 61 percent, compared with 57 percent in September and 54 percent in August.
Investor concerns about energy prices continued to decline in October as the percentage of investors saying they believe energy prices are hurting the investment climate “a lot” fell to 58 percent, down from 63 percent in September and 78 percent in August. Nearly as many investors (55 percent) now consider international tensions including those in the Middle East and in North Korea as hurting the current U.S. investment “a lot” as they do energy prices.
The decline in energy prices over the past month has not only encouraged investors about the current economic situation but has also changed investor expectations for future gasoline prices. In August, investors said they expected the average price of a gallon of regular gasoline to reach $3.30 in the following three months. In September, their expected price for a gallon of gasoline three months from then was to $2.76. In October, these expectations fell to $2.45, indicating that investor price expectations for a gallon of gas have fallen $0.85 over the past two months.
“Strong corporate earnings coupled with the easing of energy prices and reduced expectations of further Fed rate hikes have contributed to both the recent stock market rally and improved investor sentiment. As UBS expects a slowdown in the economy in early 2007, we will be watching several areas carefully, including the housing market and consumer spending,” said Mike Ryan.
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www.ubs.com/investoroptimism
