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PESSIMISM EASES AS INVESTORS SPLIT ON WHAT MATTERS MOST - AAII

Pessimism among individual investors about the short-term outlook for the U.S. stock market eased in the latest American Association of Individual Investors (AAII) Sentiment Survey. As that pulled back, optimism ticked a bit higher, and more investors also moved into the neutral camp.

At the same time, the two largest groups in the survey -- making up just over 67% of respondents -- are pretty evenly split on what’s driving their six-month outlook: roughly half point to the economy and inflation, while the other half are more focused on geopolitics.

Digging into the numbers, bearish sentiment -- meaning expectations that stock prices will fall over the next six months -- dropped 4.9 percentage points to 37.0%. Even with that decline, it’s still above its historical average of 31.0% and has been for 17 weeks in a row.

On the flip side, bullish sentiment -- expectations that stocks will rise -- edged up 0.7 percentage points to 36.3%. That’s still below its historical average of 37.5%, marking the third straight week that optimism has come in under that level.

Neutral sentiment -- those expecting stocks to more or less stay the same -- rose 4.1 percentage points to 26.7%. Even so, that’s below its historical average of 31.5% for the 98th time in the past 100 weeks, underscoring how persistent the lack of neutrality has been.

The bull-bear spread also narrowed, increasing 5.6 percentage points to –0.7%, up from –6.3% last week. Still, it remains below its historical average of 6.5% for the 16th time in the last 17 weeks.

In this week’s special question, AAII asked members what’s having the biggest influence on their six-month outlook for equities.

Here’s AAII’s graphic showing how they responded:

(Terence Gabriel)

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