Recent findings from the American Association of Individual Investors (AAII) Sentiment Survey reveal a significant increase in individual investor pessimism regarding the short-term outlook for U.S. stocks. As pessimism intensified, both optimism and neutral sentiment experienced declines.
It’s important to note that most responses for this week’s survey were collected before President Trump’s tariff announcement on April 2. The survey highlighted that bearish sentiment, which reflects expectations for stock price declines over the next six months, surged by 9.8 percentage points to 61.9%.
This figure is notably “unusually high,” exceeding the historical average of 31.0% for the 18th time in the last 20 weeks. Furthermore, it represents the third-highest reading of bearish sentiment recorded in the survey’s history, only surpassed on March 5, 2009.
The S&P 500 index had reached its Financial Crisis intraday low the day after on March 6, 2009. In addition, it’s notable that this marks the sixth consecutive week that bearish sentiment has remained above the 50% threshold.
The previous record for consecutive weeks exceeding this level was a seven-week period during the Gulf War-related market decline in October 1990. Conversely, bullish sentiment, which indicates expectations for stock price increases, fell by 5.7 percentage points to 21.8%.
This marks an “unusually low” level, as it is below the historical average of 37.5% for 12 of the past 14 weeks. Likewise, neutral sentiment also decreased, dropping 4.1 percentage points to 16.3%, remaining consistently “unusually low,” below its historical average for 37 out of 39 weeks.
Consequently, the bull-bear spread narrowed by 15.4 percentage points to a negative 40.2%, continuing a trend below its historical average. In this week’s survey, AAII also inquired whether members hold gold or other precious metals in their portfolios.