- Trader optimism holds firm, with 57% still bullish despite rising inflation and valuation fears.
- Market overvaluation concerns grow as 67% see stocks overpriced heading into Q4 2025.
- Inflation, politics, and Fed policy remain top factors shaping trader sentiment and portfolio shifts.
Traders have maintained a positive market outlook heading into Q4 2025, despite concerns about inflation and economic headwinds intensifying, according to a Charles Schwab survey released on October 30. The survey revealed that 57% of traders described themselves as bullish on the market, matching the level reported in the previous quarter.
At the same time, 67% of traders believe the market is currently overvalued, up from 57% in Q3, according to the Charles Schwab Q4 Trader Sentiment Survey. More than half of traders (57%) claimed that stagflation is possibly or very likely in the next 18 months, compared to 47% who expressed that view last quarter.
Confidence Holds Steady as Valuation Concerns Climb
The political environment in Washington topped the list of trader concerns at 19%, according to the survey. Market correction or increased volatility ranked second at a combined 21%. Treasury Secretary Scott Bessent recently named finalists to replace Powell as Federal Reserve Chair, adding to the political uncertainty that traders cited.
Traders responded to market conditions by moving assets into stocks (42%), while 27% invested in gold and 23% allocated funds to crypto. Recent data showed crypto inflows hit $921M following the September CPI report.
Moreover, traders expressed the most bullish sentiment toward the IT sector (61%), the Energy Sector (58%), and the Utilities Sector (52%). More than half (55%) said now is a good time to invest in equities.
Economic Headwinds Shape Trader Strategy
Federal Reserve actions ranked as the major factor impacting trading strategies, according to survey respondents. The central bank recently cut rates by 0.25% and halted Quantitative Tightening. Most traders (57%) expect inflation to hold steady or decline over the next six months, down from 72% who held that view in Q3.
The survey included 1,070 active trader clients at Charles Schwab and was fielded from Sep 30 to Oct 10, 2025. James Kostulias, Head of Trading Services at Charles Schwab, noted traders are carefully evaluating multiple factors as they progress through the remainder of the year.
