October 4, 2026, 6:02 a.m. ET
Three in four Americans believe recent stock market gains are “unsustainable” and think the market could be headed for a correction, according to a new survey.
The S&P 500 is up about 13% for the year and trading near its all-time high. Stocks are rising on enthusiasm for the promise of AI and strong company sales and profits.
But there is constant talk of an AI bubble: an irrational rise in technology stock prices fueled by unrealistic expectations of artificial intelligence.
Stock traders are also worried about soaring oil and gas prices linked to the prolonged war in Iran. Those fears pushed two major stock indexes into correction territory in March, when the Dow and Nasdaq fell 10% below their recent highs.
Why do so many Americans think a correction is coming?
Stocks are historically overvalued. A common metric, the cyclically adjusted price-to-earnings ratio (CAPE), stands at 41.07 for the S&P 500.
The last time – and indeed the only time – that the CAPE ratio reached this high was at the peak of the dotcom bubble, in 1999-2000. The CAPE ratio also peaked in 1929, just before the Great Depression.
All of these factors, along with rising bond yields and borrowing costs, could explain why many Americans believe the stock market could be on the verge of a correction.
The new survey, released September 22 by Allianz Life, finds that 74% of Americans believe “recent market highs are unsustainable” and that a correction could be imminent.
“It’s a big number,” said Kelly LaVigne, vice president of consumer research at Allianz Life. “We never get an answer if 74% of people say the same thing.”
Nearly two-thirds of respondents said they are “waiting to make financial decisions because economic conditions are too unpredictable.”
Only 27% say they are “comfortable with current market conditions and ready to invest now.”
The survey reached 1,005 adults in August.
Is the current stock market sustainable?
Whether the current rise in stock markets is sustainable is a matter of debate, investment experts said. There is no possibility of a market correction.
“Technically, a correction is only a 10% drop in the index you’re looking at,” said Anders Bylund, media and technology analyst at The Motley Fool.
“It happens all the time. We’ve had one or two already this year, depending on which index you look at. And they lasted a few weeks, and then we came back chasing all-time highs.”
Stock market corrections aren’t necessarily a major problem, he and other analysts said. More worrisome would be a bear market, generally defined as stocks falling at least 20% and staying at that level.
“These generally last longer and have a more profound effect on what people actually do,” Bylund said.
Bylund said he doesn’t think the current pace of the stock market is unsustainable. Other observers are divided on whether or not the market is in a bubble.
If stocks are overvalued because of inflated hopes for AI, some commentators argue, then the record highs of recent weeks are indeed unsustainable, and the bubble will eventually burst, sending stock indexes tumbling.
If stocks are correctly valued and there is no AI bubble, then a market contraction is not inevitable.
“Unsustainable? » said Bylund. “Pockets and pieces here and there, of course. There may be overvalued sectors… But once you factor in their actual sales and earnings growth, the (price-to-earnings) ratios actually don’t look that bad.”
What’s surprising about the Allianz survey, he and other market experts said, is that so many Americans think the pace of growth in stocks is unsustainable.
“What is concerning is the number of people who seem to share this common economic sentiment,” said Jai Kedia, a researcher at the Center for Monetary and Financial Alternatives at the libertarian Cato Institute.
The survey results imply that potential investors may be selling stocks or hesitating to buy them for fear that prices will fall.
If enough people behaved this way, a correction could become a “self-fulfilling prophecy,” Kedia said. “They will withdraw their money, which will eventually cause a market correction.”
It’s not just stocks: consumers are worried about the economy
The survey reflects broader boredom among U.S. consumers with the state of the economy.
Consumer confidence is at an all-time low. Americans are worried about rising prices, particularly the price of fuel. Nonetheless, stocks continue to rise.
Some degree of caution toward the stock market is a good thing, Allianz Life’s LaVigne said, because the market is volatile and corrections happen.
But the survey suggests that potential investors are staying on the sidelines, hoping to anticipate market developments. This strategy can backfire, LaVigne said, because you end up missing both good and bad days.
“In the long run, if you don’t invest in the market, you’re going to lose,” he said.
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