Investor bearishness jumps, CEOs confidence also lower
Growing concerns about the US economy which have reignited talk of recession – and this week’s market volatility – are weighing on sentiment of retail investors in equities.
Data from the American Association of Individual Investors reveals a jump in bearishness this week, narrowing the gap with the bulls that still lead the weekly survey of sentiment regarding the short-term outlook for the stock market.
The bullish score – expectation that stock prices will be higher in six months – dropped 4.3 points this week to 40.5% but remains above its historical average of 37.5% for the 39th time in 40 weeks. The bearishness score – expectation of lower stock prices – was up 12.3 points to 37.5% and is above its historical score of 31% for the second time in nine weeks. Those individual investors expressing neutral sentiment dipped 7.9 points to 22%.
The bull-bear spread (bullish minus bearish sentiment) decreased 16.6 percentage points to 3.1%. The bull-bear spread is below its historical average of 6.5% for the first time in 14 weeks.
The AAII survey also asked investors whether they felt that the Fed was right to leave interest rates unchanged, amid growing pressure for a cut in September. Almost half of respondents (48.5%) said it was the right decision, 33.8% felt rates should have been cut, 8.9% think rates should have been raised, and 8.4% were not sure or had no opinion.
Meanwhile, The Conference Board’s latest Measure of CEO Confidence has declined to its lowest reading so far in 2024.
The reading of 52 for Q3, 2024, still indicates slightly more positive responses from business leaders about current conditions but was down two points from the previous quarter with 26% of respondents saying that economic conditions
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