For the past several months, the stock market has faced pressure because of worsening relations between the U.S. and its major trading partners. However, a bigger risk could be the tense relationship between the two major U.S. political parties.
According to a new survey from Wells Fargo and Gallup, the “political climate in Washington” is seen is the biggest threat facing the U.S. market, with nearly half of those polled saying they were “very worried” about this issue. Another 30% said they were “somewhat worried,” with fewer than a quarter of respondents saying they were either not too worried, or not worried at all.
While trade issues have been the primary driver of day-to-day market activity of late, resulting in both investor optimism falling and investors trimming their exposure to stocks, “trade relations with China” was only the fourth-most-commonly cited issue, based on the ratio of respondents who said they were very worried about the issue. While 43% said they were somewhat worried about this issue, only 28% said they were very worried, a level that put it behind both the size of the Federal budget deficit (35%) and cyberattacks on either businesses or government (32%).
The results of the survey are below.
Courtesy Wells Fargo
Despite these issues, the Wells Fargo/Gallup Investor and Retirement Optimism Index nevertheless suggested investors generally were sanguine about the outlook for equities. The Retirement Optimism Index came in at 103 in the second quarter, and while this is down from a recent reading of 117, it marks the sixth straight quarter above 100. According to the firm, the index was consistently below triple-digits over the past 16 years.