Neutral Sentiment Rises Among Retail Investors

Investing.com – Neutral sentiment among retail investors has seen a slight increase, as indicated by the latest Sentiment Survey from the American Association of Individual Investors (AAII).

The survey data suggests a shift in expectations regarding short-term stock performance, with both bullish and bearish sentiments experiencing declines.

AAII reported that neutral sentiment—characterized by investors anticipating that stock prices will remain relatively stable over the next six months—rose by 3.9 percentage points, reaching 26.7%. Despite this uptick, neutral sentiment continues to be below its historical average of 31.5% for the 12th consecutive week.

The survey also revealed a modest decline in bullish sentiment, which reflects expectations for rising stock prices over the next half-year. This sentiment decreased by 1.2 percentage points, settling at 49.6%. Although this figure is lower than the previous week’s, it remains significantly above the historical average of 37.5%, maintaining an unusually high level for the second consecutive week. AAII noted that bullish sentiment has exceeded its historical average 46 times in the last 47 weeks.

On the other hand, bearish sentiment—reflecting expectations for declining stock prices—fell by 2.7 percentage points to 23.7%. This represents the sixth instance in seven weeks that bearish sentiment has remained below the historical average of 31.0%.

Additionally, the bull-bear spread, calculated by subtracting bearish sentiment from bullish sentiment, widened by 1.5 percentage points to 25.9%, remaining well above its historical average of 6.5%.

In a special question directed at AAII members regarding the Federal Reserve’s recent decision to cut interest rates by 0.50 percentage points, 57.3% agreed it was a prudent decision, while 29% believed the cut should have been smaller.

This week’s survey reflects a growing caution among investors, as the increase in neutral sentiment suggests that more individuals are opting for a wait-and-see approach.