Retail investors are growing more upbeat about the U.S. stock market’s near-term prospects, with optimism edging higher and pessimism lower, according to the latest American Association of Individual Investors sentiment survey published Thursday.
The results point to steady confidence on Main Street despite lingering uncertainty around the Fed policy outlook.
The share of respondents who believe stocks will rise over the next six months ticked up to 44.6%, a modest 0.3 percentage points higher than the prior week, but still meaningfully above the long-term average of 37.5%.
Bearish sentiment, representing the portion of investors anticipating market declines, slipped from 30.8% to 30.6%, dropping below its historical average of 31% for only the second time in the past 46 weeks.
Neutral sentiment edged down slightly to 24.8% and remained below the long-term average of 31.5% for the 73rd time in the last 75 weeks.
The bull-bear spread, a key indicator derived by subtracting the bearish percentage from the bullish, widened to 14 percentage points from 13.5%. That gap stands well above the 6.5% historical average and reflects a market leaning towards risk-on sentiment.
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Another Strong Year For Wall Street
Retail optimism appears justified when considering 2025’s performance across major exchange-traded funds.
The Invesco QQQ Trust (NASDAQ:QQQ), which tracks the Nasdaq-100, has returned a robust 22% as of Dec. 11, driven by heavyweight tech names.
The Vanguard S&P 500 ETF (NYSE:VOO) is up 16.26%, and the SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA) has advanced 14.45%.
Style-based strategies have also delivered solid returns.
The iShares MSCI USA Momentum Factor ETF (NYSE:MTUM) has climbed 21.47%, while the iShares Russell 1000 Growth ETF (NYSE:IWF) has risen 18.63%.
Dividend-focused investors have seen the Vanguard High Dividend Yield ETF (NYSE:VYM) advance 15.20%, and value-oriented exposure through the iShares Russell 1000 Value ETF (NYSE:IWD) is up 14.75%.
Even low-volatility strategies have stayed in positive territory, with the iShares MSCI USA Minimum Volatility Factor ETF (NYSE:USMV) gaining 6.45%.
Sector performance has further supported the bullish narrative, with each of the 11 S&P 500 sectors trading in the green for the year.
The Technology Select Sector SPDR Fund (NYSE:XLK) leads with a 27% gain, followed by the Communication Services Select Sector SPDR Fund (NYSE:XLC) at 22% and the Industrial Select Sector SPDR Fund (NYSE:XLI) at 20%.
Within industry-specific ETFs, gold and metal miners have delivered blockbuster gains amid rising commodity prices.
The VanEck Gold Miners ETF (NYSE:GDX) has surged an impressive 151%, while the SPDR S&P Metals & Mining ETF (NYSE:XME) has advanced 82%.
Semiconductor strength, a testament of the AI-driven growth, has also remained intact, with the VanEck Semiconductor ETF (NASDAQ:SMH) rising 51%.
Since OpenAI’s release of ChatGPT in November 2022, chipmakers tracked by the SMH ETF have rallied by around 300%.
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