Neutral sentiment lifts among retail investors By Investing.com

Investing.com — Neutral sentiment among retail investors has ticked up, according to the latest American Association of Individual Investors (AAII) Sentiment Survey.

The data reflects a shift in expectations regarding the short-term outlook for stocks, with both bullish and bearish sentiment seeing declines.

AAII reported that neutral sentiment—investors expecting stock prices to stay largely unchanged over the next six months—rose 3.9 percentage points to 26.7%.

Despite this increase, neutral sentiment remains below its historical average of 31.5% for the 12th consecutive week.

The survey reveals that bullish sentiment, which reflects expectations for stock prices to rise over the next six months, saw a modest decline of 1.2 percentage points, settling at 49.6%.

This figure, though lower than the previous week, still remains notably above the historical average of 37.5% and has been unusually high for the second week in a row. “Bullish sentiment is above its historical average for the 46th time in 47 weeks,” AAII noted.

Meanwhile, bearish sentiment, or expectations that stock prices will fall, decreased by 2.7 percentage points to 23.7%. This marks the sixth time in seven weeks that bearish sentiment has stayed below its historical average of 31.0%.

Meanwhile, the bull-bear spread, which is 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 posed to AAII members about the Federal Reserve’s recent decision to cut interest rates by 0.50 percentage points, 57.3% agreed it was the right move, while 29% felt the cut should have been smaller.

This week’s survey highlights growing investor caution as neutral sentiment edges higher, suggesting more investors are taking a wait-and-see approach.