Stay Away From the SPDR S&P 500 ETF Until Bearish Sentiment Subsides

SPY stock - Stay Away From the SPDR S&P 500 ETF Until Bearish Sentiment Subsides

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The outlook for the stock market seems to be a cause for concern among investors. AAII’s weekly investor sentiment survey supports this, reporting an increase in pessimism among investors. The market sentiment survey shows how many people are bullish on stocks, bearish, or neutral. Investors looking for a safe haven will continue to purchase SPDR S&P 500 ETF Trust (NYSEARCA:SPY) stock as they know it’s a steady investment during these times.

The percentage of bearish respondents has been increasing. Recently, the rate of bearish respondents surged to 59.4%. In 2009, this rate was as high as 70%. That was a point in time when the housing bubble burst and the 2008 financial crisis happened.

In the most recent survey, a large percentage of the neutral respondents shifted to a more negative perspective after last week’s reading of 44%. The sentiment of the AAII sentiment survey is typically a 31% to 38% mix for bears versus bulls, respectively. Recently, 16% of respondents reported being bullish.

Interest rates and geopolitical tensions are some of the most immediate implications contributing to the current bearish climate.

With a range of geopolitical tensions and interest rates, the market is currently uncertain. Since the Federal Reserve announced it would be raising interest rates seven times this year, stocks have been on a downward trend.

SPY is a type of stock that owns all the stocks in the S&P 500 index. The S&P 500 is one of the most widely used market measures — for example, trillions of dollars are benchmarked against it — and so all investors need to know about it. When you invest in SPY, it is as if you are buying the whole stock market.

Now Is Not the Right Time to Invest in SPY Stock

In April, the S&P 500 had its worst monthly decline since March 2020, shedding nearly 9%. The index is usually more sensitive to interest rates and inflation than the dollar. The lack of safety, and the concerns that come with it lead to a negative outlook from investors.

Plus, the earnings of the S&P 500 constituents are not providing a good picture, given that they are currently going down against tough comparisons. Corporate profits had a banner year in 2021; one of the main factors in why profits have been so high is because the government has borrowed far too much and given stimulus to consumers who were already recovering from the recession.

When money flowed generously into the economy, prices were high, and everyone acted like they had money all the time. However, when it all stopped coming, everything changed. Therefore, it is not a good time to invest in SPY stock.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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