Charles Schwab's latest retail client sentiment survey reveals a sharp rebound in optimism about U.S. equities, with 47% of retail clients now describing themselves as bullish, up from 28% in the second quarter. The jump, captured in the firm's Q3 2026 Retail Client Sentiment Report, marks the highest reading in at least two quarters and signals a decisive shift from the caution that dominated the spring.
The survey, conducted June 16–23, 2026, polled 1,123 retail clients and 1,100 active trader clients, each holding at least $2,000 in assets. Among active traders—those dealing in equities, options, futures, or forex—bullishness climbed to 57% from 38% in Q2. The optimism is not just talk: Schwab reported trading volumes up 57% year over year in Q2 2026, a figure that underscores real conviction in dollar terms.
Jonathan Craig, head of retail investing at Charles Schwab, called the shift "remarkable," noting that clients backed their confidence with action. The firm ended Q2 2026 with $13.08 trillion in retail client assets and 39.8 million retail brokerage accounts, providing a broad base for the sentiment data.
Confidence coexists with valuation concerns
Despite the bullish tilt, worries about stretched valuations persist. Sixty-one percent of retail clients believe the market is overvalued, up from 52% in Q2. This tension between optimism and caution is a key theme for advisors navigating client conversations, especially as AI infrastructure spending surges and market leadership narrows.
Among active traders, inflation has re-emerged as the dominant macro concern, with 52% expecting it to drive market direction in the second half of 2026, up from 40% in Q2. Geopolitical conflict (44%) and AI developments (35%) round out the top factors for retail clients. Recession fears, however, are receding: only 26% of active traders expect a U.S. recession this year, down from 39% in Q2.
Sector and asset-class preferences
Active traders are most bullish on information technology (59%), energy (56%), and utilities (54%). At the asset-class level, AI stocks lead with 62% bullish, ahead of growth stocks (59%), domestic stocks (55%), and mega-cap tech (53%). On the bearish side, real estate is the most out-of-favor sector at 43% bearish, followed by consumer discretionary (37%) and consumer staples (27%).
Optimism about corporate earnings and AI developments—each cited by 65% of active traders—is tempered by pessimism on inflation data (59% pessimistic) and geopolitical developments (51% pessimistic). The data suggests a market that is leaning in but keeping one eye on the risks, a dynamic that recent nationwide surveys have also highlighted.
Gen Z stands out
The most striking generational shift is among Gen Z clients, whose bullishness on U.S. equities nearly doubled from 24% in Q2 to 48% in Q3. Sixty-five percent of Gen Z respondents plan to add to their portfolios in the next three months, the highest rate of any segment. ETFs are their preferred vehicle (55%), and 94% say they are at least somewhat confident in achieving long-term financial goals, up from 87% in Q2.
Yet Gen Z is also increasingly wary of an AI bubble: 25% flagged it as their top investing worry in Q3, up sharply from 12% in Q2. They are the only segment that ranks AI developments above geopolitical conflict as the primary market driver for the rest of 2026. Craig noted that young investors are "engaging proactively and intentionally," adding to portfolios and developing their own market views.
For advisors, the survey underscores a client base that is more action-oriented but still mindful of valuations and macro risks. With trading volumes up and bullishness near multi-quarter highs, the challenge will be balancing enthusiasm with discipline, particularly as platforms adjust rules on complex strategies and AI compliance scrutiny intensifies.
