63% say recession is at least somewhat
likely; 62% say the same about stagflation
Traders remain resolute – 61% plan to
buy the dip if volatility persists
WESTLAKE, Texas – According to Charles
Schwab’s latest quarterly trader client sentiment survey, 57% of traders
are bearish on the U.S. stock market for the next three months, up from 34% in
Q1. It’s the most bearish sentiment recorded in two years. That said, 61% of
traders say they will ‘buy the dip’ if volatility continues. Four in ten (43%) plan
to add money into their investment portfolio and half (49%) plan to move money
into individual stocks.
Traders cite the political landscape in
Washington as their greatest concern (23%), followed by global macroeconomic / geopolitical
issues (13%) and uncertainty due to market volatility (12%). Bearishness is
highest among younger investors. Among the bears overall, 38% are confident
that they have a plan to withstand a market correction.
|
U.S. Stock Market Outlook by Life Stage
|
Young Investors
|
Mid-Life
|
Mature
|
Retired
|
|
Bullish
|
22%
|
28%
|
32%
|
34%
|
|
Bearish
|
69%
|
58%
|
50%
|
55%
|
“The market volatility we saw in late Q1 and
early Q2 understandably led traders to feel more bearish, but the research also
reinforces what we know - that traders see opportunity in volatility,” said
James Kostulias, head of Trading Services at Charles Schwab. “More recently,
we’ve seen the markets move in an upward trend. The fact that traders have
remained invested and engaged is a testament to their resilience and
adaptability. The volatility we saw is also a reminder of the critical
importance of trading on a strong and trusted platform backed by comprehensive
education and tools – especially in risk management – along with access to
live, expert support when needed.”
Economic outlook
The number of traders predicting a recession in 2025 rose sharply
from 33% in Q1 to 63% in Q2 and most say they don’t see inflation coming down
any time soon. In fact, more than six in 10 traders anticipate that the U.S.
will see stagflation – high inflation, stagnant economic growth, and elevated
unemployment – in 2025. Many cite concerns about the impact of tariffs.
Two-thirds of traders expect the Fed to lower rates
this year, but most say cuts won’t surpass 100 basis points.
|
Fed Actions in 2025
|
|
Inflation Expectations in First Half of 2025
|
|
Cut 1 – 100 basis points
|
62%
|
|
Inflation will hold steady
|
51%
|
|
Hold steady
|
27%
|
|
Inflation will reignite
|
37%
|
|
Raise rates
|
6%
|
|
Inflation will decline
|
12%
|
|
Cut more than 100 basis points
|
4%
|
|
Traders moderate risk, identify opportunities
The economic and market environment is driving 46% of traders to
moderate their risk or market exposure. Notably, at least 43% plan on hedging
with options and 29% are buying gold, crypto, and other alternative assets.
As a result of tariff policy changes, 46% say they are rotating
toward domestically focused companies and away from international stocks and/or
companies that rely heavily on international trade. However, just over half of
traders (54%) are not adjusting their strategy based on tariff news.
“Traders aren’t sitting on the sidelines –
they’re actively mitigating risk, protecting their portfolios, and pursuing
opportunistic strategies,” said Kostulias. “We’re seeing clear evidence of this
in the way traders are engaging with the tools and resources we provide. We
were already the industry leader in trading volumes, but we saw a sharp
increase in Q1 to nearly 7.4 million trades a day, including strong engagement
in overnight trading session thanks to our recently expanded 24/5 trading
capabilities and our strong futures offer. We set an all-time record during the
same period with 500 million logins. And engagement with our education is
skyrocketing; we saw a 40x increase in consumption of our market commentary and
research in Q1 and have expanded our lineup of virtual and in-person education
events in 2025 to meet client demand.”
Sector and asset class views
On a sector level, traders are the most bullish on Energy (53%)
and Utilities (50%), and most bearish on Consumer Discretionary (58%) and Real
Estate (49%). They also became significantly more bearish on IT (42%) and
Finance (38%) compared to Q1.
Across asset classes, traders are the most bullish on value stocks
(53%), fixed income (41%), and commodities (39%). When asked what the most
crowded trade is right now, traders ranked AI stocks (36%) and Mega Cap Tech
Stocks (26%) highest.
About the Charles Schwab Trader Sentiment Survey
The Charles Schwab
Trader Sentiment Survey
is a quarterly study exploring the outlooks, expectations, trading patterns and points
of view of clients at Charles Schwab–who actively trade equities or trade
options, futures, or forex. The study included 981 Active Trader clients at
Charles Schwab and was fielded from April 1 – 14, 2025.
About Charles Schwab
At
Charles Schwab, we believe in the power of investing to help individuals create a better
tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity.
More
information is available at aboutschwab.com. Follow us on X, Facebook, YouTube, and LinkedIn.
Disclosures
The information here is for general informational purposes only
and should not be considered an individualized recommendation or personalized
investment advice.
Investing involves risk, including loss of principal.
©2025
Charles Schwab &
Co., Inc. All rights reserved.
Member SIPC.
0525-VLSP
Media Contact:
Margaret Farrell
Charles Schwab
(203) 434-2240
margaret.farrell@schwab.com