The American Association of Individual Investors (AAII) survey revealed that bearishness, at 61.9%, continued to outpace bullish and neutral sentiment this week, marking a week-over-week rise in pessimism.
What Happened: The most recent results from the AAII Sentiment Survey, which tracks investor sentiment weekly from Thursday to Wednesday, revealed an increase in pessimism. Specifically, the proportion of individual investors expressing a bearish outlook on the stock market’s short-term trajectory surged by almost 10%, climbing from 52.2% to 61.9%.
This rise in the bearish sentiment marked a 16-year high from March 2009, as highlighted by Kevin Gordon, the director and senior investment strategist at Charles Schwab & Co., in an X-post.
Bearish sentiment has now persisted above the 50% level for six consecutive weeks. This prolonged period of pessimism follows last week’s occurrence, which was the first five-week stretch of such elevated bearishness since similar patterns emerged in October 1990 and 2022.
The historical average of bearish sentiments stood at 31%, which was half of the current pessimism among the participants of the AAII survey.
The bullish sentiment for the week stood at 21.8%, down from 27.4% last week, whereas the neutral sentiment shrank from 20.4% to 16.3% this week.
Why It Matters: The worries about President Donald Trump‘s tariffs have worried the stock markets, increasing the pessimism among investors.
President Trump, citing a “large and persistent trade deficit,” declared a trade emergency Wednesday, utilizing a 1977 law to impose reciprocal tariffs.
The White House detailed the tariffs, emphasizing “Treat us like we treat you.” While Canada and Mexico were exempt, China, Vietnam, Cambodia, and Sri Lanka faced the highest increases, leading gold prices to a record $3,167.71 and prompting a flight to safe-haven assets.
However, the respondents to AAII’s special question this week about having gold in their portfolio were largely negative. The survey asked its participants if they held gold or other precious metals in their portfolio, either directly or through an ETF.
About 60.1% of respondents said “no,” 18.5% responded “yes,” and others admitted to holding both mining companies and precious metals in their portfolios.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Thursday. The SPY was down 3.30% to $545.87, while the QQQ declined 3.80% to $458.06, according to Benzinga Pro data.
Gold prices were lower by 0.17% at $3,127.80 after scaling a fresh record of $3,167.71 per ounce.
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