Tanking sentiment

G'morning Opening Bell team.?Phil Rosen here — this California sun has me feeling chipper!?

But that puts me in a rare company these days.?

In this economy, bears abound and optimism is as hard to spot as a week without a crypto hack.

Today, I'm breaking down why everyday traders and institutional investors alike are feeling downbeat about the stock market.

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1. Wall Street's confidence in the stock market?hasn't been this low in over five years, if you go by?Bank of America's Sell Side Indicator .?

People look to this metric as a gauge of investor sentiment, and right now it signals that investors are?bracing for a downturn .

"While the SSI does not catch every rally or decline in the stock market, the indicator has historically had?some predictive capability ?with respect to subsequent 12-month S&P 500 total returns," BofA analysts said Wednesday.

But they also pointed out that a second signal?—?the Equity Risk Premium ?— shows markets are pricing in an 80% chance of a mild recession, and a 30% chance of a "full-blown " recession.

And optimism only drops when data points confirm forecasts. BofA had earlier predicted a recession to hit before 2023, and these moves support that hypothesis.?

Now for a barometer of Main Street sentiment,?let's turn to the?retail trader's once-favorite app .?

Seven million retail investors have left Robinhood over the past year. That's a 34% drop.?

Investors are leaving the platform as?equities and cryptos lose momentum ?from the easy-money days of the last two years.

And the platform is taking notice and making changes:?Robinhood this week announced plans to cut 23% of its staff .??

But amid all the pessimism, one name still draws the bull.?Retail investors'?enthusiasm for Tesla is the highest it's been in two years ?ahead of today's vote on a 3-for-1 stock split.

You can hear me talk more about this on today's episode of?The Refresh from Insider .

In other news:

2. This batch of stocks is poised to stand out while recession fears make stock-picking historically difficult.?David Kostin of Goldman Sachs pointed out which companies have the best shot at outperforming a market that's becoming increasingly difficult to navigate.?Here is his list of 25 names.

3. This veteran strategy chief warned investors not to fall for the recent stock market rally.?Michael Farr expects the current rebound to lose steam as recession fears climb.?Instead, he recommends taking a beat from this four-part investing playbook.

4. Wealthy international buyers poured nearly $60 billion into the US housing market over the last year.?Foreign customers are showing confidence in American real estate with all-cash offers even as bearish analysts are calling for a potential crash —?and these buyers aren't worried about a bidding war.

5. Paypal surged 14% Wednesday after it launched a massive $15 billion stock buyback.?The fintech company also received backing from Elliott Management.?Now, Bank of America is forecasting a dividend to shareholders could be announced early next year.

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This newsletter was curated by Phil Rosen. Thoughts or questions? Sound off in the comments section below.