Individual investors' expectations of stock market returns during the next 12 months have fallen back into the single-digit range, according to UBS PaineWebber Inc.'s latest monthly survey of investor optimism.
The firm's August poll, released Monday, showed that investors on average expected a return of 9.4% from stocks over the next year.
It was only the second time in the survey's relatively short history that the expected rate of return was below 10%. The lowest figure was 8.7%, recorded in April.
Gallup Organization, which conducts the survey for PaineWebber, has been asking a question about 12-month return expectations since June 1998.
Not surprisingly, investors' expectations were far higher when the bull market was still raging. In December 1999, for example, the average expected 12-month return hit a peak of 18.4%.
PaineWebber strategist Mary C. Farrell said an onslaught of bad news about the U.S. economy and persistent stock market volatility continue to dampen enthusiasm among investors.
Year-ahead return expectations varied sharply by age, the survey showed.
Among investors over 40, the average expected return sank to 8.8% from 10.1% in July.
But younger investors became more bullish: Among those under 40, the average expected return rose to 11.4% from 10.6% in July.
Year to date, the average U.S. stock mutual fund has lost 10.7%, according to Morningstar Inc.