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Investor Sentiment Has Rebounded to Pre-Liberation Day Levels, BofA Says

1. Investor sentiment rebounded, reaching a three-month high in June. 2. Allocation to U.S. stocks has slightly increased, but remains net underweight. 3. 54% of respondents favor international stocks over U.S. stocks for future performance. 4. Expectations of a global recession decreased, yet some foresee stagflation. 5. Return of cash to shareholders via buybacks is a growing trend among fund managers.

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FAQ

Why Bullish?

While investor sentiment is improving, the move towards U.S. stocks shows cautious optimism. Historically, a sentiment rise often precedes market gains, but past trade wars have introduced volatility.

How important is it?

The shift in investor sentiment and asset allocation could significantly impact S&P 500 valuations, especially in a volatile market.

Why Short Term?

Positive sentiment and cash return expectations may boost the S&P 500 in the near future, similar to reactions seen after favorable earnings seasons.

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