Investor sentiment sinks to lowest since 2025 as Fed hikes rates

US individual investor sentiment deteriorated sharply this week, with bearishness reaching its highest level since May 2025 as markets absorbed the Federal Reserve’s first interest rate increase since 2023. The latest American Association of Individual Investors survey showed 53.3% of respondents were bearish on stocks over the next six months, up 14 percentage points from the previous week. Bullish sentiment fell 9.2 points to 28.8%, its lowest reading since September 2025. The spread between bullish and bearish investors dropped to negative 24.5 percentage points, well below its historical average of positive 6.5 points for the ninth consecutive week. More than half of respondents also reported holding more cash than normal, including 19.1% who said their allocation was much higher than usual. The decline comes after the Federal Reserve raised its benchmark rate by 25 basis points to a range of 3.75% to 4.00% on Wednesday, its first increase since July 2023. The Fed said inflation remains elevated and indicated the move was intended to support a return toward its 2% target. Investors are also contending with elevated energy prices and Treasury yields. Brent crude remained above $...