Weak Sentiment Yet Market Near A High

By David Templeton of Disciplined Investing

Chief Investment Officer and Principal, HORAN Wealth • Sep 18, 2026 at 4:02 PM EDT

The S&P 500 remains near record highs despite Fed rate hikes and historically weak consumer sentiment.

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The Federal Reserve announced a quarter point increase in the Fed Funds rate on Wednesday and the S&P 500 Index closed down -.45% on the day. On the subsequent day (Thursday) the S&P rebounded and was higher by 1.14%. For the year the S&P 500 Index remains up 11.43% as this is prepared and only down about 2% from its high.

In spite of the decent equity returns going into the fourth quarter, investor sentiment is anything but strong. Many sentiment measures are showing weakness, for example the University of Michigan Consumer Sentiment index is near a record low 45.8%.

University of Michigan Sentiment and S&P 500 performance

Other sentiment measures focused on investments are exhibiting bearishness too. The American Association of Individual Investors bullish sentiment reading fell 9 percentage points to 28.77%.

AAII bullish sentiment and S&P 500 Index

The sentiment measures are most actionable at their extremes and lower bullishness readings are possible in the coming weeks with the 8-week moving average at 34.7%, a neutral level. Yet, it is surprising the market has held up as well as it has given these low sentiment readings.

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