Most Traders Predict a Recession This Year: Schwab

Inflation Drives Bearish Sentiment 

The survey found that 59% of traders are bearish, up 6 percentage points from the second quarter, with young traders experiencing the most significant dip in optimism. Only 28% of young investors reported a bullish outlook for the U.S. stock market, down 11 points from the previous quarter. 

“This is the first time some young traders are riding out a more prolonged bear market, so it’s no surprise their optimism took a hit,” Metzger said. 

Although inflation remains the top concern around money and investing for 21% of traders surveyed, 79% think it will ease by the end of 2023. Likewise, most traders think the Federal Reserve will slow the pace of interest rate increases through the remainder of the year. 

Traders are generally confident in their ability to weather the storm. Of those who think the market is due for a significant correction, 69% said they are confident that they have a plan to withstand it. Half think this is a good time to invest, and 64% expressed confidence in their decision-making. 

In terms of sectors and asset classes, survey participants are broadly optimistic about health care, energy and utilities. Although at a sector level many are bearish on finance, 27% believe finance can be bought at a discount right now, and 39% think the same is true of tech. 

Half of traders said they are bullish on value stocks, and about half are bearish on growth stocks, international stocks and equities in general. Sixty-three percent also said they are bearish on both meme stocks and cryptocurrencies. 

Indeed, few traders reported plans to buy cryptocurrency; for those who plan to do so, most are not first-time crypto investors, according to the survey.