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INDIVIDUAL INVESTOR PESSIMISM IS "UNUSUALLY HIGH" - AAII

Individual investor pessimism over the short-term outlook for U.S. stocks hit a fresh high back to early November 2023 in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, optimism declined and neutral sentiment increased slightly.

Meanwhile, a little over half of investors surveyed believe tariffs will "slow growth and increase prices."

AAII reported that bearish sentiment, or expectations that stock prices will fall over the next six months, rose 4.4 percentage points to 47.3%. Bearish sentiment is "unusually high" and is above its historical average of 31.0% for the 11th time in 13 weeks.

Bearish sentiment was last higher on November 2, 2023 (50.3%). (Of note, back then, just four trading days earlier, the S&P 500 index .SPX had ended a 10.3% correction on a closing basis).

Bullish sentiment, or expectations that stock prices will rise over the next six months, retreated 4.9 percentage points to 28.4%. Bullish sentiment is below its historical average of 37.5% for the fifth time in seven weeks.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.5 percentage points to 24.3%. Neutral sentiment is below its historical average of 31.5% for the 30th time in 32 weeks.

With these changes, the bull-bear spread declined 9.3 percentage points to about –18.9% from -9.5% last week. The bull-bear spread is below its historical average of 6.5% for the sixth time in eight weeks.

In this week's special question AAII asked its members how they think tariffs will impact the economy.

Here is AAII's graphic showing how they responded:

(Terence Gabriel)

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