Consumer sentiment rises, but AI bubble concerns emerge

The headline Index of Consumer Sentiment increased to 51.0 from 48.0 in October, marking a 6.3% gain. However, this improvement only brought the index back to its November 2025 level of 51.0.

Interestingly, households with substantial stock holdings experienced a 5% decrease in sentiment, contrasting with the more optimistic outlook of lower- and middle-wealth households. This divergence has implications for investors, particularly those holding the Invesco QQQ Trust (NASDAQ:QQQ), which closed at $656.10 on November 6, up 1.4%, and the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), which closed at $735.36, up 0.32%. Over the past month, QQQ has fallen 13.41% compared to SPY’s 5.39% decline.

The survey also showed that the increases in expected personal finances and business conditions were largely driven by political independents. The current conditions index rose to 51.0 from 46.7, while expectations increased from 48.8 to 50.9.

The concerns about an AI bubble emerged from open-ended comments, without providing a specific percentage of consumers holding this view. Joanne Hsu linked the decline in sentiment among wealthier stockholders to a turbulent period in the markets, suggesting they are feeling the impact of recent losses in the AI sector.

A significant 57% of consumers reported that high prices have negatively impacted their living standards, up from 46% in February. This remains 10% below February’s sentiment level. The November reading represents the highest level since August’s 51.7, and the October reading was the second-lowest on record, behind only the May 2026 low of 44.8.

The survey was conducted between October 20 and November 2, meaning it did not capture the market’s sharp selloff on November 5, when the S&P 500 fell 4.36% and the Nasdaq Composite fell 5.52%. The S&P 500 rebounded slightly on November 6, rising 0.31%, but still lost 2.68% for the week. The volatility index (VIX) closed at 28.18 on November 5.

Year-ahead inflation expectations decreased to 4.3% from 4.7%, while long-run expectations fell to 3.4%, still above the 2024 range of 2.8% to 3.2%. This suggests that lower interest rates may not significantly mitigate a potential tech selloff. The October Consumer Price Index, due November 10, will be a key indicator.

QQQ currently sits about 14% below its 52-week high of $762.86, while SPY is about 5.9% below its high. As of June 30, NVIDIA (NASDAQ:NVDA) comprised 7.596756593966% of QQQ, highlighting the concentrated exposure to AI and data center spending. The final November reading, scheduled for release on November 20, will reveal whether Thursday’s market losses have influenced the sentiment of wealthier households.