Young traders believe that there is still upside potential in the U.S. stock market bull market and plan to continue investing more funds

According to the latest quarterly client survey by Charles Schwab, despite the current high stock market valuations, this has not dampened traders' optimism. An increasing number of investors are betting that the bull market still has room to rise, and bullish sentiment in the market continues to strengthen.

The survey results show that the proportion of bullish traders is 51%, far exceeding the bearish proportion of 34%. Notably, among traders under 40, the bullish proportion surged to 59%, a significant increase from 47% in the fourth quarter of last year.

It is worth noting that even though two-thirds of traders believe the market valuations are already high, they still believe there is room for the bull market to rise. James Kostulias, head of trading services at Charles Schwab, stated, "Traders generally believe there is some bubble in the market, but overall, they remain optimistic about future trends." He added, "More than half of the traders plan to continue investing more funds into the stock market in the first quarter."

While investors' bullish sentiment is often interpreted as a positive signal for the market, it can also become a contrarian indicator when the market is overly optimistic.

Over the past two years, the S&P 500 index has risen more than 50%, and the market has experienced a strong bull run. However, with increasing concerns about economic slowdown and market volatility brought about by the new government's rapid policy adjustments, the upward momentum of the stock market has recently weakened. So far this year, the S&P 500 index has only risen 1.3%, while the Nasdaq Composite Index, which has a high proportion of technology stocks, even fell into negative territory in 2025.

From an industry perspective, traders are most optimistic about the energy, technology, financial, and utility sectors. These sectors typically benefit from the potential deregulation policies of the Trump administration, leading to an optimistic outlook on their growth prospects.

In addition to the rising bullish sentiment, the survey also found that traders' concerns about a U.S. economic recession have significantly decreased. Only one-third of respondents believe the U.S. may fall into recession in the short term, compared to 54% in the previous quarter.

At the same time, traders' concerns about a resurgence of inflation have also decreased. The survey shows that two-thirds of respondents believe price pressures will remain stable and will not experience a significant rebound