Optimism among individual investors about the stock market’s near-term prospects waned for a second straight week as sticky inflation reduces chances of interest rate cuts.
A total of 43.4% of respondents to the American Association of Individual Investors, or AAII, Sentiment The survey showed optimism about the direction the market will take over the next six months, up from 47.3% and 50% respectively in the past two weeks.
The percentage of respondents who feel bearish about the market also increased this week. It stood at 24%, compared to 22.2% last week.
Neutral sentiments also increased this week, with 32.5% of respondents surveyed by AAII seeing no change in the direction of the market. The week before the number was 30.5%.
The hotter-than-expected consumer inflation report released this week, which rose 0.4% in March and beat the 0.3% rise economists had expected, dampened hopes for a near-term outlook for a rate cut by the Federal Reserve.
“Even without a war or any other event that causes a major disruption to global oil supplies, we see no scenario for US inflation in which the US Fed is likely to be justified in lowering interest rates, between now and October 2024. ”, underlined Seeking Alpha analyst James Kostohryz.
However, President Joe Biden still sees the Federal Reserve cutting interest rates later this year, he said Wednesday, confirming his forecast from last month.
Nasdaq, S&P and Dow futures rose Thursday following the report.
The S&P 500 Index (SP500) has fallen nearly 1% over the past week, while the Dow Jones Industrial Average Index (DJI) decreased by more than 1%. The NASDAQ Composite Index (COMP:IND) fell 0.6%. NASDAQ 100 Index (NDX) decreased by 0.8%.
Bitcoin USD (BTC-USD) is up 4% since last Thursday, while gold (XAUUSD:CUR) is up nearly 3%. Gold futures posted another record high on Tuesday, extending their streak of gains. However, prices fell slightly on Wednesday.