Investors have become less pessimistic about the short-term outlook for stocks this week, with recent economic data raising hopes of a rate cut.
The American Association of Individual Investors (AAII) sentiment survey showed that a total of 26.1% of respondents said They believe the market will trend downward over the next six months, following last week’s 28.3% decline.
Neutral sentiment also increased this week, with 32.2% of investors surveyed by AAII seeing no change in market direction. A week ago the figure was 27.2%.
The May personal consumption expenditures (PCE) price index, widely seen as the Fed’s preferred inflation gauge, eased in May, bringing relief to market participants.
Fed officials said at the June Monetary Policy Committee meeting that they were looking for more favorable inflation data to further bolster confidence that things are moving in the right direction, and the committee acknowledged that progress had been made on the inflation target. Modest further progress”. 2% inflation target.
Federal Reserve Chairman Powell’s statement on inflation also calmed market sentiment.
However, weaker earnings at some heavyweight stocks have reduced the number of investors who are optimistic about the stock market’s short-term outlook.
A total of 41.7% of respondents expressed optimism about the direction of the market over the next six months, compared with 44.5% last week.
The bullish and neutral figures are above the historical averages of 37.5% and 31.5% respectively.
This week, Wall Street digested Nike’s (NKE) alarming warning that sales would fall 10% this quarter, sending the sportswear giant’s stock down more than 10% in after-hours trading.
Memory chip maker Micron’s shares fell 7% in extended trading on Wednesday after it issued guidance in line with expectations, casting a shadow over stronger-than-expected third-quarter results.
Similarly, pharmacy chain Walgreens Boots Alliance (WBA) also lowered its full-year forecast on Thursday due to the severe overall retail situation, and its stock price also fell by more than 5%.
In addition, investors are also focused on this week’s first U.S. presidential election debate between President Joe Biden and former leader Donald Trump, which will touch on topics such as inflation, the economy, and employment.
A recent analysis from Seeking Alpha noted: “Major markets have begun cutting interest rates, the United States is expected to begin easing policy in December, and the upcoming election may put pressure on markets, but the global economy remains in relatively good shape.”
The S&P 500 Index (SP500) rose nearly 1% over the past week, while the Dow Jones Industrial Average (DJI) rose slightly. The Nasdaq Index (COMP:IND) and the Nasdaq 100 Index (NDX) rose nearly 2%.
