The political landscape in Washington, D.C. remains retail investors’ top investing concern, followed by geopolitical or global macroeconomic issues

Key Takeaways:

• Forty-six percent of retail clients are bearish on the U.S. stock market for Q4, up from 35% in Q3 2026, while 36% are bullish, down from 47% in Q3.
• Retail investors’ top investing concern is the political landscape in Washington, D.C., and they believe geopolitical conflicts will have the biggest impact on the stock market for the remainder of 2026.
• Nearly half (48%) of retail clients are confident in their current investing decisions, and 90% say they are confident about reaching their financial goals.
• Among Schwab’s active trader clients, 84% say they are likely to “buy the dip” if there is a notable market decline in Q4.
• Traders are mixed on AI infrastructure buildout: 33% say returns will justify the investment over time, 27% believe companies are overinvesting and their earnings will suffer, and 36% say it’s too early to tell how much the investments will pay off.
• Gen Z investors cite an AI bubble as their top investing concern for the second consecutive quarter.

Company Website: http://www.schwab.com
WESTLAKE, Texas -- (Business Wire)

Stock market sentiment turned net bearish for the quarter according to the Q4 2026 Retail Client Sentiment Report from Charles Schwab, a leader in investing and trading with $13.33 trillion in total client assets, 48.6 million client accounts, and 10.7 million daily average trades in Q3 2026.

According to Schwab’s Q4 Retail Client Sentiment Report:

• Forty-six percent of retail investors are bearish on the U.S. stock market this quarter, up from 35% in Q3, while 36% are currently bullish, down from 47% in Q3. Bearish sentiment was highest this year in Q2 with 58% of investors saying they were bearish and just 28% saying they were bullish.
• The political landscape in D.C. is retail investors’ top concern (21%), followed by geopolitical or global macroeconomic issues (15%), a potential AI bubble (10%), and inflation (10%).
• Retail investors say geopolitical conflict (57%) will have the biggest impact on the stock market for the remainder of the year, ahead of inflation (45%), tariffs/trade policy (36%), AI developments (36%), and interest rates (33%).
• Forty-eight percent of retail investors are confident in their investment decision making, and 46% plan to add money to their investment portfolios, with ETFs (32%) and individual stocks (32%) being the most likely destinations.
• Retail investors are most bullish on Energy (57% bullish) and IT (49% bullish) and most bearish on Real Estate (51% bearish) and Consumer Discretionary (47% bearish).
• Forty-two percent of retail investors say it’s a good time to invest in equities, and 45% feel better off financially compared to a year ago, both down from Q3.
• Approximately nine in 10 retail investors are confident about reaching their financial goals.

“Short term market sentiment can shift quickly, and our clients are more cautious about where stocks are headed right now,” said Jonathan Craig, Head of Retail Investing at Charles Schwab. “But importantly, overall retail investor confidence and engagement are still high. Clients feel good about their investment decision making and reaching financial goals despite shorter term concerns, and we see clients adding assets and opening new brokerage accounts as well as continuing to interact with us across digital channels and in our hundreds of branches across the country.”

Additional findings from Schwab’s Q4 report include:

• Forty-five percent of Schwab retail clients think inflation will reignite in Q4, while 38% expect it to hold steady.
• Most clients expect the Fed to either hold rates steady (41%) or raise rates (35%) for the remainder of 2026, while just 5% expect a rate cut.
• When asked about the valuation of major market indexes, 47% of retail investors think the NASDAQ Composite index is overvalued, and just 19% think it is fairly valued. Investors are more mixed on the S&P 500 (41% overvalued and 30% fairly valued) and the Dow Jones Industrial Average (35% overvalued and 28% fairly valued).

Active Traders Grow More Cautious but Remain Ready to Buy the Dip

Bearish sentiment also increased among Schwab’s active trader clients for Q4, although traders remain slightly more bullish about the markets than retail clients overall. Additionally, more than eight in 10 (84%) traders say they are at least somewhat likely to “buy the dip” if there is a notable market decline in the next three months.

Traders are optimistic about corporate earnings and AI developments in Q4, and they are pessimistic about geopolitical developments and inflation.

According to the Q4 report:

• Forty-three percent of Schwab active trader clients are currently bearish, up from 30% in Q3, while 40% are bullish, down from 57% in Q3.
• Forty-two percent of traders say it’s currently a good time to invest in equities, down from 60% in Q3.
• Two-thirds of traders are confident in their investing decisions – a number that has held steady for all of 2026.
• Fifty-seven percent of traders are optimistic about Q4 corporate earnings, and 53% are optimistic about developments in AI.
• Traders expect geopolitical conflict (56%), inflation (47%), and interest rates (45%) to have the greatest impact on the direction of the U.S. stock market for the rest of the year.
• Forty percent of traders think inflation will reignite in Q4, and 41% expect it to hold steady. Most expect the Fed to either hold rates steady (43%) or raise rates (39%) for the remainder of 2026, while only 3% expect a cut.
• Thirty-eight percent of traders believe the U.S. will enter a recession this year or next, while 32% do not.

“Experienced traders look for opportunity in every kind of market,” said James Kostulias, Head of Trading Services at Charles Schwab. “Sentiment is more cautious, but traders aren’t retreating. Instead, they’re looking to buy weakness selectively, with a sharper focus on valuations, earnings, and areas where they see durable growth.”

Across asset classes and types of investments, Schwab’s trader clients are most bullish on oil (54%), gold (50%), value stocks (49%), AI stocks (49%), and growth stocks (46%).

At the sector level, traders are most bullish on energy (71% bullish), utilities (53% bullish), and health care (50% bullish). They’re most bearish on real estate (53% bearish), consumer discretionary (46% bearish), and consumer staples (30% bearish).

When asked about technology companies’ AI infrastructure buildout, traders are mixed on what the future holds: 33% say returns will justify the investment over time, 27% believe companies are overinvesting and their earnings will suffer, and 36% say it’s too early to tell how much the investments will pay off. Forty-nine percent of traders plan to maintain their current exposure to AI in their portfolios, while 20% plan to increase their exposure and 18% plan to lower their exposure.

Nearly 60 percent of Schwab’s trader clients are bullish on AI hardware/infrastructure stocks, 44% are bullish on hyperscaler/cloud platform stocks, and 41% are bullish on AI software/application stocks.

Gen Z Sees a Recession Ahead but Keeps Investing

Schwab’s Gen Z clients mirrored the broader shift toward bearish sentiment in Q4, and they are more likely to view a possible AI bubble as an investing concern:

• Forty-six percent of Gen Z investors are bearish in Q4, up from 40% in Q3, while 39% are bullish, down from 48% in Q3.
• Six in 10 Gen Z investors plan to add money to their investment portfolios, and they are most likely to move assets into ETFs (46%) and individual stocks (36%).
• Gen Z is more concerned about an AI bubble than retail investors overall, with 20% citing it as the top investing concern, followed by geopolitical or global macroeconomic issues (15%), and the political landscape in D.C. (13%).
• Gen Z clients expect geopolitical conflict (59%) and developments in AI (54%) to have the biggest impact on the stock market for the remainder of 2026.
• Fifty-three percent of Gen Z clients feel confident in their investing decisions, compared with 57% in Q3, and 94% are confident in reaching their financial goals.

“Young investors express the same caution about the market that we see across the board this quarter, and they are more focused on the potential impact of an AI bubble,” said Craig. “But at the same time, they mirror the strong engagement we see across our client base, and they are looking for investing opportunities. According to our survey, six in 10 Gen Z investors plan to add to their portfolios between now and the end of the year, and a quarter say they will seek investing guidance or advice.”

About the Charles Schwab Client Sentiment Survey

The Charles Schwab Client Sentiment Survey is a quarterly study exploring the outlooks, expectations, plans, and points of view of clients at Charles Schwab. The Q4 2026 study included 964 retail clients and 836 active trader clients at Charles Schwab with retail assets of at least $2,000 and was fielded from September 10 through September 17, 2026. Active traders are defined as clients who actively trade equities or trade options, futures, or forex. An additional oversample of 281 Gen Z clients was collected for Gen Z-specific reporting.

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

This material is intended for informational purposes only. The investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

Investing involves risk, including loss of principal, and for some products and strategies, loss of more than your initial investment.

©2026 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

1126-RFW8

View source version on businesswire.com: https://www.businesswire.com/news/home/20261102666882/en/

Contacts:

Media:
Meredith Richard
Charles Schwab
Meredith.Richard@schwab.com
646-343-7419

Source: The Charles Schwab Corporation