Phil Rosen
August 31, 2026
Stock Market Hits Record Highs While Investor Sentiment Remains Pessimistic
TL;DR
Despite the S&P 500 posting its best second quarter in a midterm year with over 15% gains and hitting new record highs, investor sentiment remains bearish with consumer confidence weak and bears outnumbering bulls for four consecutive weeks.
Key Takeaways
- 1The market gained over 15% in Q2 of the midterm year, marking the greatest second quarter performance in a midterm year ever out of 16 quarters in a four-year presidential cycle
- 2Stock market is hitting new highs almost daily, yet consumer confidence numbers came in weaker this morning
- 3The AAII sentiment poll shows bears have outnumbered bulls for four consecutive weeks, with the number of bulls continuing to drop
- 4A disconnect exists between market performance and investor psychology—as markets rally to record levels, retail investors remain pessimistic and anxious
- 5Long-term bulls had predicted poor market performance in late March, but the speaker did not share that bearish view and was not surprised by the subsequent market recovery
Notable Quotes
“We're hitting new highs feels like almost every day anymore. People don't feel good.”
— Speaker
“We gained like well over 15% in that quarter. That was the greatest second quarter of a midterm year ever.”
— Speaker
“Four weeks in a row we've had more bears than bulls. The number of bulls just dropped again. As the market's going up.”
— Speaker
Chapters
1. Record Q2 Performance in Midterm Year
The market achieved over 15% gains in Q2 of the midterm year, the greatest second quarter performance out of 16 quarters in a four-year presidential cycle.
2. New Record Highs Amid Weakening Consumer Sentiment
Despite hitting new record highs almost daily, the market faces weaker consumer confidence numbers and AAII sentiment showing bears outnumbering bulls for four consecutive weeks.
3. The Sentiment-Performance Disconnect
Market sentiment reveals a puzzling disconnect: as the S&P 500 climbs to records, investors remain anxious and bearish, contradicting the fundamental strength of recent performance.
Key People & Entities
- Sam Stovall
- Market analyst cited regarding historical market patterns and seasonal trends
Glossary
- AAII sentiment poll
- American Association of Individual Investors survey tracking investor sentiment through the ratio of bullish to bearish investors
- Midterm year
- The second year of a four-year presidential cycle, typically characterized by specific market patterns