Schwab Q3 Retail Client Sentiment Report: Investors Turn Bullish on U.S. Stock Market as Confidence Climbs Despite Concerns the Market May be Overvalued

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Gen Z points to a possible AI bubble as their top concern 

Active traders see inflation as the key watchpoint for the stock market in the second half

Key Takeaways:

• Forty-seven percent of Schwab retail clients are now bullish on the U.S. stock market, a sharp increase from 28% in Q2 2026. 
• Among Schwab’s most active trader clients, 84% say they are at least somewhat likely to “buy the dip” if there is a notable market decline in the next three months, and 41% describe themselves as at least somewhat risk-seeking. 
• Forty-five percent of Schwab clients think inflation will hold steady in Q3, while 31% expect it to reignite – down from 50% in Q2.   
• Gen Z clients see AI developments as the top factor that will impact the stock market for the remainder of 2026 and unlike other client segments, Gen Z’s greatest investing concern in Q3 is an AI bubble.

WESTLAKE, Texas--(BUSINESS WIRE)-- Charles Schwab, a leader in investing and trading with $13.08 trillion in retail client assets, 39.8 million retail brokerage accounts, and 11.9 million daily average retail trades in Q2 2026, today released its Q3 2026 Retail Client Sentiment Report, which finds that stock market sentiment is largely bullish for the quarter – a significant shift from Q2.

According to Schwab's Q3 Retail Client Sentiment Report:

• Sentiment swung sharply positive quarter-over-quarter, with 47% of Schwab clients now bullish on the U.S. stock market compared to 28% in Q2.
• Forty-nine percent say it’s a good time to invest in equities, compared to 43% in Q2. At the same time, 61% say the stock market is overvalued, up from 52% in Q2.
• Forty-eight percent feel better off financially compared to a year ago, up from 39% in Q2.
• Fifty-one percent are confident in their decision making and 45% plan to add money to their investment portfolios.

“The shift in client sentiment this quarter has been remarkable. Bullishness on the U.S. stock market nearly doubled from Q2, and our clients backed that conviction with action, driving trading volumes up 57% year over year,” said Jonathan Craig, Head of Retail Investing at Charles Schwab. “That kind of engagement tells us how investors are thinking right now. They're not sitting on the sidelines. They're informed, they're active, and they're building toward their long-term goals.”

Additional findings from Schwab’s Q3 report include:

• Across all retail clients, the political landscape in Washington, D.C. is the top investing concern (20%), followed by worries that the market is overdue for a correction (13%) and inflation (12%).
• Forty-five percent of Schwab clients think inflation will hold steady in Q3, while 31% expect it to reignite – down from 50% in Q2.
• Schwab clients expect geopolitical conflict (44%), inflation (43%), and developments in artificial intelligence (35%) to have the biggest impact on the direction of the stock market for the remainder of 2026.

Inflation Emerges as the Top Market Concern for Active Traders in Q3 2026

Market sentiment among Schwab’s active trader clients jumped significantly as economic worries eased. They are watching inflation closely as a key driver of market performance:

• Fifty-seven percent of Schwab active trader clients are bullish on the U.S. stock market, up from 38% bullish in Q2.
• Inflation moved to the forefront of factors traders think will have the greatest impact the direction of the U.S. stock market for the rest of the year (52%, up from 40%).
• Twenty-six percent of traders believe there will be a recession this year, compared to 39% in Q2.
• Fifty-seven percent of traders believe the Fed will hold rates steady between now and the end of the year, while 12% expect rate hikes and 16% expect rate cuts under the new Chair.
• Sixty percent say it’s currently a good time to invest, up from 48% in Q2.

Traders continue to look for opportunities, with 84% saying they are at least somewhat likely to “buy the dip” if there is a notable market decline in the next three months, and 41% describing themselves as at least somewhat risk-seeking. They are optimistic about corporate earnings (65%) and AI developments (65%), and lean pessimistic on inflation data (59%) and geopolitical developments (51%) in the near term.

“Trader clients have leaned into the recent rally, and their appetite for buying dips hasn’t wavered even as they monitor inflation and geopolitics as ongoing risks,” said James Kostulias, Head of Trading Services at Charles Schwab. “Traders see opportunity in every kind of market and are ready to act on volatility – and we’re here to support them with industry-leading trading capabilities, education, and support to help them move nimbly when opportunities arise.”

Schwab’s trader clients remain most bullish on AI stocks (62%), growth stocks (59%), domestic stocks (55%), mega cap tech stocks (53%), and value stocks (51%). Among these categories, bullishness on AI and growth stocks climbed the most sharply since Q2, up 15 and 17 percentage points, respectively.

At the sector level, traders are most bullish on information technology (59%), energy (56%), and utilities (54%). They’re most bearish on real estate (43%), consumer discretionary (37%), and consumer staples (27%).

Gen Z Sees AI as the Biggest Market Driver—and Its Biggest Potential Risk

Schwab’s Gen Z clients also saw a surge in bullish sentiment, yet concerns about an AI bubble set them apart:

• Forty-eight percent of Gen Z clients are bullish on the U.S. stock market, up from 24% in Q2.
• Unlike other client segments, Gen Z sees AI developments as the factor that will have the greatest impact on the stock market for the remainder of 2026, narrowly beating geopolitical conflict.
• Also unlike other client segments, Gen Z is most concerned about an AI bubble in Q3 (25%; up from 12% in Q2).
• Fifty-seven percent of Gen Z clients feel confident in their investing decisions, up from 44% in Q2. Ninety-four percent are at least somewhat confident in reaching their financial goals, up from 87% quarter-over-quarter.
• Sixty-five percent of Gen Z clients plan to add money to their investment portfolio in the next three months, with ETFs (55%) being the investment type they’re most likely to move assets into.

“We consistently see young investors engaging proactively and intentionally with their investments,” said Craig. “They’re adding to their portfolios, seeking out guidance, growing their knowledge and developing their own points of view about the markets and economy. Gen Z investors are comfortable using digital tools and platforms, but they also still want access to education, context, and guidance as they make decisions.”

About the Charles Schwab Client Sentiment Survey

The Charles Schwab Client Sentiment Survey is a quarterly study exploring the outlooks, expectations, plans, and points of view of clients at Charles Schwab. The Q3 2026 study included 1,123 retail clients and 1,100 active trader clients at Charles Schwab with retail assets of at least $2,000 and was fielded from June 16 through June 23, 2026. Active traders are defined as clients who actively trade equities or trade options, futures, or forex. An additional oversample of 457 Gen Z clients was collected for Gen Z-specific reporting.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at aboutschwab.com. Follow us on X, Facebook, YouTube, and LinkedIn.

Disclosures

This material is intended for informational purposes only. The investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

Investing involves risk, including loss of principal, and for some products and strategies, loss of more than your initial investment.

©2026 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

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Margaret Farrell
Director, Corporate Affairs
(203) 434-2240
margaret.farrell@schwab.com

Source: The Charles Schwab Corporation