One-Quarter of Investors Expect Stock Prices to Fall in Wake of Trade Impasse

This week’s Sentiment Survey special question asked AAII members how, given the recent U.S.-China headlines, trade issues are influencing their outlook for stocks. Responses varied, though most respondents view the trade impasse as a near-term negative for stocks.

Nearly a quarter of all respondents (24%) say they expect stock prices to fall if the impasse continues. Just under 17% of respondents describe themselves as being more cautious or are otherwise postponing buying more stocks until there is more clarity. About 9% anticipate more uncertainty, while a similar proportion of respondents think trade issues will contribute to further volatility in the stock market. Slightly more than 12% expect the stocks to rise once a deal is reached, though many of these respondents say the stocks could be under pressure until then. Approximately 14% say trade issues are not influencing how they invest.

Here is a sampling of the responses:

• “Definitely affecting it. I will continue to be cautious with new acquisitions until the issue is resolved.”
• “The lack of a trade agreement and imposition of tariffs will likely result in a drop in the stock market.”
• “I believe they will work something out, although in the short term there could be some slowing in the economy.”
• “I am taking advantage of the volatility; buying the dips and selling the peaks.”
• “They make my outlook for stocks definitely bearish. Without the trade war, my outlook would be neutral to slightly bullish.”

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