Investors Remain Cautious and Bearish Despite Market Gains

Investors are not completely buying into the stock market’s bullish narrative this year, according to Bank of America.[0] Investors have pulled money out of US technology and healthcare stocks, with the outflow trend of the past month being the worst since January of 2019.[0] The reading from the American Association of Individual Investors (AAII) shows a continuation of bearish investors that started over a year ago, with 57 out of the past 58 weekly surveys showing bearish respondents outnumbering bullish respondents.[0]

Michael Hartnett, chief investment strategist at BofA, sees good reason for this bearishness and recommends investors pull back from the S&P 500 when it reaches the 4,100 to 4,200 range.[1] He believes a hard landing will occur in 2023, but that a further tightening of financial conditions this spring may be needed to push the US economy into a recession.[1]

Wells Fargo equity strategist Anna Han believes the current rally in US stocks is likely to be “fleeting than long-lasting.”[2] She added that when investor sentiment going into earnings season this year was so low, it was hard to trip over.[2] Han believes the consumer is somewhat healthy, as evidenced by earnings season and economic data, and that corporates are cutting earnings growth and feeling margin pressures, but it’s not an aggressive contraction.[3]

Overall, investors remain cautious and bearish, but the market is still on the rise, with the S&P 500, Nasdaq Composite, and Dow Jones all starting 2023 in the green. Time will tell whether investors will remain bullish or bearish in the long run.

0. “Record cash levels show investors remain unconvinced by the stock market’s bullish transition in 2023, Bank of” Business Insider India, 27 Jan. 2023,

1. “Record cash shows investors unconvinced by stock market’s bull transition” Markets Insider, 27 Jan. 2023,

2. “The US stocks rally is driven by optimism that things are ‘not as bad as feared,’ but this may not last, Wells Fargo strategist warns” Yahoo News, 27 Jan. 2023,

3. “Stock market outlook: US stocks rally is ‘odd’ and will be fleeting” Markets Insider, 27 Jan. 2023,