Investing.com -- In the latest American Association of Individual Investors (AAII) Sentiment Survey, bearish sentiment among investors is said to have seen a significant decline, reflecting improved investor confidence in the market.
"Bearish sentiment plummets," was the headline from the AAII.
They said pessimism about the stock market's short-term outlook dropped 3.3 percentage points to 27.6%, marking its 12th week below the historical average of 31.0% over the past 13 weeks.
Meanwhile, bullish sentiment, or the expectation that stock prices will rise over the next six months, climbed 2.1 percentage points to reach 41.5%.
This level of optimism is notably above its historical average of 37.5% and represents the 52nd time in 53 weeks that bullish sentiment has exceeded this long-term benchmark.
Neutral sentiment, which reflects expectations for stability in stock prices, also ticked up by 1.3 percentage points to 30.9%, though it remains slightly below its historical average of 31.5%.
The AAII noted that with these shifts, the bull-bear spread—calculated as the difference between bullish and bearish sentiment—widened to 14.0%, significantly higher than the long-term average of 6.5%.
They explained that the spread has been above the historical norm for 26 of the last 27 weeks, underscoring a prevailing tilt toward optimism among individual investors.
The survey also included a special question gauging investor perceptions on inflation, with 44.6% of respondents indicating they believe inflation is "returning to a more acceptable pace." Meanwhile, 35.7% felt it is "slowing but not by enough," and 15.5% expressed concerns that it is "still rising too quickly."