Investors warm to stocks after Fed hold — AAII

Individual investors grew more optimistic about the U.S. stock market in the latest American Association of Individual Investors (AAII) Sentiment Survey, with bullish sentiment rising while neutral and bearish views retreated.

The survey also showed broad support for the Federal Reserve's decision to hold interest rates steady at last week's FOMC meeting, with more than half of respondents saying policymakers made the right call.

Bullish sentiment, or expectations that stock prices will rise over the next six months, climbed 6.0 percentage points to about 37.0%. Even so, optimism remains just below its historical average of 37.5% and this is the third time in the past four weeks that it has fallen short of that mark.

Neutral sentiment edged down 1.9 percentage points to 25.0%, indicating fewer investors expect stocks to remain largely unchanged over the coming six months. Neutral sentiment remains well below its long-term average of 31.0%, falling short of that level for the 22nd time in 23 weeks.

Bearish sentiment fell 4.1 percentage points to around 38.0%. Even with the decline, pessimism remains elevated, having stayed above its historical average of 31.5% for 26 consecutive weeks.

The bull-bear spread improved sharply to negative 0.9% from negative 11.1% the previous week for a swing of around 10 percentage points. Still, the spread remains below its historical average of 6.5%, suggesting investors remain cautious despite the improved mood.

AAII's special survey question this week focused on the Fed's decision to hold rates steady. A majority of respondents said the central bank made the right move.