Inflation Is Weighing on Investors' Market Outlook: Schwab

Of the 920 clients polled last month, 46% reported a bullish outlook on the U.S. stock market, down from 53% in the first quarter. Bearish sentiment varied by age but increased significantly among young and midlife investors, jumping more than 15% for each group, from the first quarter, Schwab said.

Inflation concerns more than doubled from the first to second quarter this year, rising to 19% from 9% of clients citing it as a primary concern, hitting the top spot. Inflation was followed by the political landscape, a market correction and geopolitical or global macroeconomic issues as top concerns.

"Traders began the year feeling pretty confident that the economy was improving and Fed rate cuts would be quick to follow," James Kostulias, Schwab's trading services head, said in a statement.

"But inflation concerns have jumped significantly," he said. "While about half of traders believe we'll avoid a recession this year, overall stock market sentiment cooled a bit in Q2 as those concerns took hold and expectations for rate cuts were significantly dialed back as key drivers like the Consumer Price Index indicated inflation was once again on the rise in March."

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