A new report from Moomoo Financial Canada shows that investors are divided about whether the U.S. and Canadian economies can avoid a recession. As consumers and inventors await interest rate cuts by the Federal Reserve and Bank of Canada this September, the report finds that the technology sector remains a top preference for retail investors, while utilities and materials are a close second.

According to the report, 35 percent of respondents said they were bullish about the stock market heading into September, while 47 percent said they were neutral. Investors are also divided about whether the U.S. and Canadian economies can avoid a recession in the next six months. More than 50 percent of respondents said they expect the U.S. to prevent a downturn, compared with 49 percent in Canada. 

Many respondents were also confident that the economy is headed for recession, with 47 percent saying they expected a recession in the U.S. compared with 51 percent for the Canadian economy. Meanwhile, 71 percent of respondents said they are buying more U.S. stocks than Canadian stocks. 

More than 60 percent of respondents said they were somewhat confident they could meet their investment goals, with 40 percent focused on achieving their retirement goals. 

"At the time the survey closed on August 21, the S&P/TSX Composite Index was up over 10 percent since the beginning of the year and the S&P 500 Index was over 17 percent, led by the technology sector,” said Justin Zacks, vice president of strategy at Moomoo Technologies Inc. “Investors continue to favor this sector, likely reflecting confidence in the promise of artificial intelligence. Given that many of the largest technology companies are headquartered and listed in the U.S., it comes as no surprise that most Canadian investors continue to buy more U.S. stocks than Canadian stocks," he said.

Zacks added that the preference of utilities and materials, as well as defensive sectors, is indicative of a cautious approach of investors. Zacks noted it is consistent with the finding that investors are divided about the possibility of a recession and that nearly half are neutral about stock markets for the rest of 2024. 

The survey also showed that retail investors look toward institutional investors' decisions as a source of inspiration for their own investment decisions, with 46 percent of the respondents stating that institutional investors' decisions drive their own choices, Zacks said.