Investor bearishness climbs as inflation and midterms unsettle US markets
Rising rate expectations are adding to that unease. Following the Federal Reserve’s first rate increase in more than three years, 34% of investors now expect another hike at the next meeting, up from 27% in Q3. That shift matters for advisors navigating fixed income allocations and client conversations about portfolio risk heading into year-end.
Midterm elections add a political dimension
Political uncertainty is compounding investor anxiety. Nearly half of survey respondents (48%) said they are concerned about the potential impact of the midterm elections on the stock market. With the November 3, 2026, vote now days away, those concerns are unlikely to fade quickly.
That level of client anxiety around elections is not unusual. Research into how wealthy investors are approaching the 2026 midterms has found that demand for financial advisor guidance tends to spike during election cycles, with clients eager to understand the implications for their portfolios before the results are known.
“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 at 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.”
Most investors are sitting tight
Despite the gloomier outlook, the survey found that most investors are not making drastic changes. More than four in five respondents (86%) said they believe their portfolio is well-positioned against inflation. And 42% reported they do not plan to make any changes to their allocations over the next six months, up from 39% in Q3.
