Federal Reserve’s Tapering Has Little Impact on Investor Attitudes


This week’s AAII Sentiment Survey special question asked AAII members how the Federal Reserve’s ongoing tapering of bond purchases is impacting their six-month outlook for stock prices. Slightly more than half of all respondents (51%) said the tapering is not having any impact. Several of them (accounting for about 10% of all respondents) believe the market has already priced in the gradual ending of bond purchases by the central bank. About 17% thought the ending of quantitative easing is a negative or could lead to either additional volatility or a correction. An additional 8% said the ending of bond purchases and potential rise in interest rates is causing them to become more cautious or view stocks less favorably. At the other end of the spectrum, six percent of respondents view the tapering as a positive for the stock market.

Here is a sampling of the responses:

  • “Old news, it should not affect the stock market.”
  • “Not at all. I am looking forward to the end of tapering and the gradual increase in interest rates to get us back to a normal state.”
  • “The ongoing tapering has already been figured in by the market and will have no impact on my forecast whatsoever.”
  • “Once the reality of higher rates sets in, it will increase volatility and either flatten or lower stock prices.”
  • “I find it generally encouraging. The economy must be getting better for the Fed to taper.”

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