Investors Haven't Been This Pessimistic About Stocks Since 2023

S&P 500 climbed 23% in 2024, led by a handful of stocks that touched sky-high valuations as the year progressed

- Hannah Erin Lang

Bearishness among individual investors—measured by the percentage who expect stock prices to fall over the next six months—reached 47.3% for the week ended Feb. 12, according to the latest survey from the American Association of Individual Investors. That is the highest level since November 2023.

The unabashed bullishness that marked much of the past two years has been muddied by trade-war threats, regulatory upheaval, stubborn inflation, and the dwindling expectations for additional interest rate cuts.

The S&P 500 climbed 23% in 2024, led by a handful of stocks that touched sky-high valuations as the year progressed. And while investors haven't totally soured on the market, the constant flurry of headlines has left some less confident in where stocks head from here.

Rising pessimism isn't always a bad sign. Indeed, some investors use the survey as a contrarian indicator, selling when bullish sentiment touches highs and buying when bearishness jumps.

"The mood is confused. They don't know which policies are going to stick and which ones aren't," said Ed Yardeni, president of Yardeni Research. "It isn't necessarily bearish, it is just not bullish."