Investors Worry Most About Inflation, Expect Lower Returns in 2022

December 28, 2021

Looking forward to 2022, Wall Street investors are most concerned about inflation and anticipate lower returns than this year, according to a recent CNBC investor survey.

The survey found that, among the 400 portfolio managers and investment officers polled, more than half said their biggest worry for 2022 is inflation. Roughly 30% said the Fed raising rates at the wrong time was their top concern, and 17% said the coronavirus.

The survey suggests that, even as the Omicron variant has Americans nervously eyeing climbing case numbers, Wall Street believes the virus will not have a serious economic impact. Instead, inflation, which is surging at the highest level in decades, and the Fed, which has signaled intentions to act aggressively to combat inflation, are much more likely to impact the markets in 2022.

As for the markets, the respondents think it is unlikely we will see a repeat of this year’s stellar performance. More than half, 55%, of the respondents expect the S&P 500 to be up less than 10% at the end of 2022, a marked slowdown from this year’s 27% increase. Just 18% expect to see gains of between 10% and 20%, while 10% say the index will be flat.

Among the different asset classes, the respondents prefer equities and indicated they were most likely to buy financial stocks or cyclical stocks that would benefit from the economic recovery. Technology stocks have fallen out of favor, with just 15% saying they were most likely to buy mega-cap tech stocks in the coming year.

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