Investing.com -- Pessimism among individual investors declined according to the latest American Association of Individual Investors (AAII) Sentiment Survey, as bearish sentiment dropped while optimism and neutral sentiment slightly improved.

According to AAII, bearish sentiment—expectations that stock prices will fall over the next six months—fell by 6.0 percentage points to 52.2%, marking the 17th time in 19 weeks that it has remained above its historical average of 31.0%.

Despite the decline, bearish sentiment continues to be "unusually high."

At the same time, bullish sentiment—expectations that stock prices will rise over the next six months—rose 5.8 percentage points to 27.4%, though it remains below its historical average of 37.5% for the 11th time in 13 weeks.

Meanwhile, neutral sentiment edged up by 0.1 percentage points to 20.4%, staying below its historical average of 31.5% for the 36th time in 38 weeks.

The bull-bear spread (the difference between bullish and bearish sentiment) increased by 11.8 percentage points to -24.7%, said the firm. However, they noted that it remains below its historical average of 6.5% for the 12th time in 14 weeks.

The survey also included a special question on the Federal Reserve’s recent decision to keep interest rates unchanged. A strong majority of respondents—77.3%—believed it was the right move, while 11.6% thought rates should have been cut and 4.2% favored an increase.

Despite the improvement in sentiment, overall investor outlook remains cautious, with bearish sentiment still significantly elevated compared to historical trends.