A majority of active investors have a bearish outlook on the U.S. stock market for the coming months, a big spike from a few months earlier, although many are prepared to “buy the dip,” according to Charles Schwab’s latest client sentiment survey.
The second-quarter survey, which explored outlooks and expectations for actively trading Schwab clients, found 57% were bearish on the stock market for the next three months, up from 34% in the first quarter. This was the most bearish sentiment in two years, according to Schwab, which surveyed 981 “active trader” clients from April 1-14, as the market reeled from the Trump administration's tariff maneuvers.
Sixty-one percent of clients said they would buy the dip if volatility continues. Over 40% planned to add money to their portfolios and nearly half planned to shift money into individual stocks, Schwab found. Among bearish clients, 38% were confident they could withstand a market correction.
Clients cited the political landscape in Washington as their greatest concern, with 23% saying this, followed by global macroeconomic and geopolitical issues and uncertainty from market volatility, at 13% and 12%, respectively. Bearishness was highest among younger investors, at 69%, although 50% or more from all generations shared that sentiment. Retirees were the most bullish, at 34%.
“The market volatility we saw in late Q1 and early Q2 understandably led traders to feel more bearish, but the research also reinforces what we know — that traders see opportunity in volatility,” James Kostulias, Schwab's trading services head, said.
“More recently, we’ve seen the markets move in an upward trend. The fact that traders have remained invested and engaged is a testament to their resilience and adaptability," he said.
The percentage of investors predicting a 2025 recession rose to 63% in the second quarter from 33% in the first, the survey found.
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