Investors haven't been this bullish since the start of 2022, Bank of America survey shows

Hopes of a "Golidlocks" economic environment have fueled recent market optimism, according to strategist Michael Hartnett.

• Investors haven't been so bullish since January 2022, according to a Bank of America survey.
• Hopes of a "Goldilocks" economy are fueling their optimism, strategist Michael Hartnett said.
• Stocks have soared since Jerome Powell signaled the Fed could call time on its inflation battle.

Investors haven't been so upbeat since the start of last year, according to a Bank of America survey published Tuesday, with a looming Federal Reserve pivot fueling year-end cheer on Wall Street.

The bank polled 219 fund managers and found the group hadn't been this bullish since January 2022, which strategist Michael Hartnett attributed to hopes of a "Goldilocks '24" economic outcome where growth runs neither too hot nor too cold.

Investors are responding to that outlook by dumping cash and loading up on stocks and bonds, Bank of America found.

Both equities and fixed-income assets have surged since Jerome Powell signaled to the market that the Fed is ready to start slashing interest rates, with inflation cooling toward its 2% target.

"The question of when will it become appropriate to begin dialing back the amount of policy restraint in place — that begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today," the central bank chair said Wednesday, at the conclusion of December's Federal Open Market Committee meeting.

The S&P 500 has jumped nearly 3% since Powell's dovish comments and is close to setting a new record high, while 10-year Treasury yields have retreated 13 basis points to drop below 4% for the first time since August. Both stocks and bonds tend to benefit when interest rates fall because there is less incentive for investors to park their cash in lower-yielding savings accounts.

Bank of America also found that 66% of the fund managers it polled expect the world economy to experience a so-called "soft landing" in 2024, which refers to the scenario where inflation cools without a recession or spike in unemployment.

The bank's own head of US equity strategy Savita Subramanian is one name on Wall Street who is expecting stocks to perform well in 2024. She said in a research note last month that she expects the S&P 500 to trade at 5,100 points at year-end, implying a 7% jump from its current levels.

Deutsche Bank's Binky Chadha, RBC's Lori Calvasina, and BMO's Brian Belski are all also backing the gauge to set new all-time highs in 2024.