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Bearish Sentiment Ticks up as Investors Grow More Cautious, Morgan Stanley Wealth Management Pulse Survey Finds

Business Wire

Amid persistent inflation concerns, midterm election uncertainty and rate-hike expectations, investors feel their portfolios are well-positioned

NEW YORK, October 26, 2026--Morgan Stanley Wealth Management today announced the results of its quarterly retail investor pulse survey:

  • Bearish sentiment builds. 42% of investors are bearish this quarter, a 4-percentage point increase from Q3.

  • Investors brace for more hikes as inflation stays top of mind. Following the Fed's first increase in more than three years, 34% of investors expect another rate increase at the next meeting, up from 27% last quarter. Inflation continues to rank first among investors' concerns at 54%, up 2-percentage points from Q3.

  • Midterm elections add uncertainty. Nearly half (48%) of investors are concerned about the elections' potential impact on the stock market.

  • Investors stay the course. More than four in five (86%) say their portfolio is well-positioned against inflation. And 42% do not plan to make changes to their portfolio over the next six months—up from 39% in Q3.

"There's no shortage of market and economic headwinds to make investors cautious as we approach year-end." said Chris Larkin, Managing Director and Head of Trading and Investing, E*TRADE from Morgan Stanley. "Market fluctuations are inevitable, and periods like this are when discipline matters most. Investors seem to understand that—even as they brace for potential volatility, they're staying focused on the bigger picture."

The survey explored investor views on sector opportunities for the fourth quarter of 2026:

  • Information technology—Technology remained investors' top sector pick at 55%, amid continued interest in AI.

  • Energy—Interest in energy rose four percentage points to 47%, ranking second, amid geopolitical uncertainty and heightened concerns about oil supply and prices.

  • Health care—Health care maintained third place at 33% as investors continue to see opportunity in the sector's defensive characteristics amid heightened market uncertainty.

About the Survey

This wave of the survey was conducted from October 1 to October 23, 2026 among an online US sample of 953 self-directed investors, investors who fully delegate investment account management to financial professionals, and investors who utilize both. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level. It was fielded and administered by Dynata. The panel is broken into three investable assets: less than $500k, between $500k to $1 million, and over $1 million. The panel is 60% male and 40% female and self-select as having moderate+ investing experience, with an even distribution across geographic regions, and age bands.

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