(Bloomberg) -- Optimism over Federal Reserve interest rate cuts has spurred investors to up their exposure to US stocks to the highest level in more than two years, according to Bank of America Corp.’s latest fund manager survey.

There is “record optimism on rate cuts” and 79% of survey respondents expect the global economy to experience either a soft or no landing in 2024, BofA’s team led by Michael Hartnett wrote in a note. Most respondents see stocks as the best way to play the Fed rate cutting cycle, the analysts said.

The findings chime with a rally in US equities over the past two months that has pushed the benchmark stock index to a record. Investors are now fixated on economic data for answers on when rate cuts will begin, with some betting the first reduction will come as soon as March. US stock futures dropped on Tuesday as trading is set to resume in the cash market after a long weekend.

The earnings season is another stock-market catalyst to watch out for. Only 21% of investors think profits will worsen in next 12 months, down from 26% from last month, and the lowest level since February 2022.

Participants are still adding large sums into money-market funds, with cash levels at 4.8% in January. Investors poured a record $1.2 trillion amount into cash funds last year, far overshadowing the amount that went to global equities, implying that many investors missed out on the rally.

The most crowded trade currently is going long on the “Magnificent Seven” group of US stocks which includes Apple Inc., shorting China equities and being long on Japanese shares, according to the survey.

The poll was conducted between Jan. 5 to Jan. 11, spanning 221 participants with $589 billion in assets under management.

--With assistance from Michael Msika.

(Updates with stock futures move in third paragraph.)

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