AAII Sentiment Survey: Pessimism Stays Above Average for Seventh Consecutive Week

Pessimism among individual investors decreased but remained above average for the seventh consecutive week. Neutral sentiment decreased slightly, while bullish sentiment rose.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 10.8 percentage points to 33.3%. After being unusually low for the past six weeks, optimism found its way back closer to its average. However, bullish sentiment is still below its historical average of 37.5% for the 70th time out of the past 72 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased by 0.3 percentage points to 31.6%. Neutral sentiment is above its historical average for the 13th time out of the past 14 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 10.6 percentage points to 35.0%. After being unusually high for the past five weeks, pessimism is now at a seven-week low. Still, bearish sentiment remains above its historical average of 31.0% for the 67th time out of the past 72 weeks.

The bull-bear spread (bullish minus bearish sentiment) increased 21.4 percentage points to –1.7%, ending its six-week streak of being unusually low.

The improvement in optimism occurred as the S&P 500 index bounced back from its recent lows. In addition, individual investors mostly approved of the smaller interest rate hike announced by the Federal Reserve a few weeks ago. Inflation along with market volatility and the pace of economic growth continue to influence individual investors’ short-term outlook for stocks.

This week’s special question asked AAII members how the headlines about banks have affected their six-month outlook for stocks. Here are their responses:

• They are not influencing my outlook: 26.5%
• They are making me more cautious: 41.5%
• They are making me more optimistic: 4.4%
• No direct effect yet, as I am waiting to see how things evolve: 27. 7%

See more Sentiment Survey results.