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

Investor caution coexists with portfolio confidence: 86% said their holdings were well-positioned against inflation.

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

NEW YORK--(BUSINESS WIRE)-- 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.

About Morgan Stanley Wealth Management

Morgan Stanley Wealth Management, a global leader, provides access to a wide range of products and services to individuals, businesses and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement and trust services.

About Morgan Stanley

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit https://www.morganstanley.com/.

This has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies and encourages investors to seek the advice of a Financial Advisor.

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Past performance is not a guarantee or indicative of future performance. Historical data shown represents past performance and does not guarantee comparable future results.

This material contains forward-looking statements and there can be no guarantee that they will come to pass.

Diversification and asset allocation do not guarantee a profit or protect against loss in a declining financial market.

This material should not be viewed as investment advice or recommendations with respect to asset allocation or any particular investment.

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Morgan Stanley Smith Barney LLC and Dynata are not affiliates.
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Alexa Mazzei - alexa.mazzei@morganstanley.com

Source: Morgan Stanley Wealth Management