AAII Sentiment Survey: Optimism Pulls Back, but Stays Above Average

The results from the latest AAII Sentiment Survey shows optimism pulling back following last week’s big rise. In addition, the percentages of investors describing their outlook for stocks as “neutral” and “bearish” both increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 7.1 percentage points to 39.8%. However, given that last week’s reading was the highest since July 1, 2021, optimism remains above the historical average of 38.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 5.3 percentage points to 30.7%. This is the seventh time in 10 weeks that neutral sentiment is below its historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased by 1.6 percentage points to 29.4%. This is the first time pessimism is below its historical average of 30.5% on consecutive weeks since July 2021.

The return to normalcy from the coronavirus pandemic, monetary and fiscal stimulus and inflationary pressures are influencing individual investors’ outlook for stocks. Other factors include earnings, valuations and the Biden administration’s initiatives.

In this week’s special question, we asked AAII members to share which sectors or industries they favor right now. Many respondents listed more than one sector or industry.

One in five respondents (20%) view financial sector stocks as being attractive right now. About 18% of respondents cite the energy sector. This compares to 13% of respondents who mention the technology sector. Coming in fourth were consumer cyclicals (12%). Other sectors and industries mentioned included health care (9%), basic materials (7%) and transportation (4%).

See more Sentiment Survey results.