DEFINITION of 'Sentiment Indicator'

A graphical or numerical indicator designed to show how a group feels about the market, business environment or other factor. A sentiment indicator seeks to quantify how various factors, such as unemployment, inflation, macroeconomic conditions or politics influence future behavior.

BREAKING DOWN 'Sentiment Indicator'

Sentiment indicators can be used by investors to see how optimistic or pessimistic people are to current market conditions. For example, a consumer sentiment index that shows pessimism may make companies less likely to stock up on inventory, because they may fear that consumers will not spend.

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RELATED FAQS
  1. What methods can be used to measure and profit from investor sentiment?

    First of all, when people talk about investor sentiment, or market sentiment, they are referring to the aggregate attitude ... Read Answer >>
  2. Do rising unemployment rates tend to increase or decrease investor sentiment and ...

    Discover whether rising unemployment rates tend to increase or decrease consumer confidence and investor sentiment. Unemployment ... Read Answer >>
  3. What is the difference between market indicators and economic indicators?

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  4. What economic indicators are important to consider when investing in the retail sector?

    Learn why the unemployment rate and Consumer Confidence Index are two of the best economic indicators when investing in the ... Read Answer >>
  5. What are leading, lagging and coincident indicators? What are they for?

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