Consumer Sentiment and the Stock Market

U.S. economic growth is moderating, but it remains positive, with a tight labor market and inflation likely to ease further into year-end.

Consumer sentiment is still near historic lows, even though the broader economy looks only average, suggesting fear may be running well ahead of fundamentals. That disconnect has often been a supportive signal for stocks over the next 12 months, especially when pessimism is driven by uncertainty rather than weaker corporate earnings.

Still, investors should not rely on sentiment alone. Valuations, profit growth, rates, and policy shifts remain important risks and opportunities. In this environment, selective rebalancing makes sense while keeping room for the market’s current bull trend to continue.