Investing.com – Neutral sentiment has risen among retail investors, according to the latest American Association of Individual Investors (AAII) survey.
The data reflects a shift in expectations regarding the short-term outlook for stocks, with both bullish and bearish sentiment seeing declines.
Neutral sentiment — investors who expect stock prices to remain largely unchanged over the next six months — rose 3.9 percentage points to 26.7%, the AAII reported.
Despite this increase, neutral sentiment remains below its historical average of 31.5% for the 12th week in a row.
The survey reveals that bullish sentiment, which reflects expectations that stock prices will rise over the next six months, saw a modest decline of 1.2 percentage points, to settle at 49.6%.
This number, although lower than the previous week, was still significantly higher than the historical average of 37.5% and was 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, fell by 2.7 percentage points to 23.7%. This is the sixth time in seven weeks that bearish sentiment remains below its historical average of 31.0%.
Meanwhile, the bullish spread, which is calculated by subtracting bearish sentiment from bullish sentiment, widened 1.5 percentage points to 25.9%, remaining well above its historical average of 6.5%.
In a special question asked to members of the American Institute about the recent decision by the Federal Reserve to cut interest rates by 0.50 percentage points, 57.3% agreed that it was the right move, while 29% felt that the cut should have been smaller.
This week’s survey highlights growing investor caution as neutral sentiment rises, suggesting more investors are taking a wait-and-see approach.