U.S. affluent investors' confidence rose in January to the highest in more than three years, thanks to a rally in stocks and an improved economic outlook, a wealth management consulting group said on Wednesday.
The Spectrem Affluent Investor Confidence index, measuring the investment confidence and outlook of households with $500,000 or more in investable assets, rose to negative-3, but that was the highest level since December 2007, the Spectrem Group said. That level compares with a reading of negative-8 in December.
The Spectrem Millionaire Investor Confidence index, however, dipped 5 points to 2 over the same period.
Spectrem said both indexes are in neutral territory but are up sharply since the summer. The affluent investor index was at negative-20 in August, while the millionaire index was at negative-18.
"Both groups have made strong gains since late summer and seem poised for more, should the economy and stock market continue to cooperate," said George Walper, president of the Spectrem Group, in the release.
U.S. President Barack Obama's extension of the Bush-era tax cuts, which he signed into law on December 17, gave affluent investors and millionaires another reason to be optimistic as the year began. The wealthiest Americans will get the biggest boost to after-tax income, due to the continuation of low federal income-tax rates, as well as low taxes on capital gains and dividends.
But the Spectrem Group's statement summarizing the January investor surveys did not mention the tax cuts.
In interviews, affluent investors cited stock market conditions and the economic environment as the factors most affecting their investment plans.
Stocks rallied into the end of the 2010 and began 2011 on a strong note, pushing the benchmark Standard & Poor's 500 index up 9.4 percent since the start of December.
Stocks, which have been on an up trend since early September, have risen so much that many analysts are expecting a "healthy" pullback in the near term followed by a return to gains.
Optimism about the economy has bolstered investors' sentiment, as data has underscored views the recovery is on track. Data on Tuesday showed an index of U.S. consumer confidence rose in January to its highest in eight months.
The affluent investor index is based on 250 monthly interviews with the financial decision-makers in households with $500,000 or more in investable assets.
© 2017 Thomson/Reuters. All rights reserved.