Investors’ outlook on investing took a steep tumble in May, according to a new poll.

The Wells Fargo/Gallup Investor and Retirement Optimism Index released Friday recorded the largest quarterly drop in its history for the second quarter.

The index, an indicator of U.S. investors’ outlook on investing, plummeted a record 134 points in May. Pollsters say that is the lowest level at +4 in nearly 7 years. The drop was a drastic change from the first quarter of 2020, which logged a 20-year high of +138.

But the sour outlook doesn’t mean investors are shying away from the market. 

Poll results show:

• About 6 in 10 investors say now is a good time to invest in the financial markets.
• Nearly seven in 10 investors say they are very (21%) or somewhat (48%) confident about investing in the stock market as a way to build wealth for retirement. This is unchanged from a year ago.
• 8% of investors say they see the current stock market environment as a time to decrease stock holdings to protect from additional losses. 
• 48% of investors say it is a good time to hold onto investments and wait for the market to come back.

The survey indicates investor optimism dropped by 84 points on the economic dimension of the index, which puts it in negative at -31. The economic dimension of the index is investors’ 12-month outlook for U.S. unemployment, economic growth, the stock market and inflation. 

All four categories saw a drop in optimism level from investors. Unemployment saw the biggest decline with a drop of 34 points, according to the poll. Economic growth saw a drop of 26 points and optimism about the stock market and inflation each fell by less than 20 points.

Investors also reported they are less confident they will reach their 12-month investment targets. The poll indicates a decrease of 32 points. But investors still say they confident they will reach their 5-year investment goals. 

For this poll, investors are defined as U.S. adults with $10,000 or more invested in stocks, bonds or mutual funds, either within or outside a retirement savings. 

The survey was conducted between May 11-17, which is days after the Bureau of Labor Statistics reported a loss of 20.5 million jobs in April. The market also plunged when polling began with a nearly 1,000-point drop of the Dow Jones Industrial Average.

This survey has been conduced since 1996. All previous declines in optimism were less than 100 points including after 9/11 and the 2008 global financial crisis.

This poll surveyed 1,076 adult investors. It has a margin of sampling error of plus or minus 5 percentage points. 

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