Reddit sentiment tracks next-day returns during market downturns
Reddit sentiment is associated with next-day market returns, especially during downturns, according to a European Central Bank (ECB) blog. Its AI-based indicator tracks retail investor mood across topics and assets.
Turning posts into market signals
The Reddit Retail Investor Sentiment Indicator (R-RISI) uses OpenAI's ChatGPT 5.1 to classify posts by positive, negative or neutral sentiment, topic and stock ticker or asset class.
It draws on investing and macroeconomic communities, including r/wallstreetbets, r/stocks, r/StockMarket, r/investing, r/Bitcoin and r/Economics.
The model uses context to interpret slang, ambiguous language and company references.
Topic contributions show what drives changes in mood: macroeconomic posts weighed on sentiment during COVID-19, while tariff discussions drove declines in April 2025.
The authors report more timely, higher-frequency information than surveys and an association with next-day returns, particularly during market downturns.
Different narratives, different reactions
Geopolitical sentiment fell immediately after Russia's invasion of Ukraine; macroeconomic sentiment weakened later as energy and inflation effects emerged.
AI sentiment tracks the Magnificent Seven: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
Bitcoin sentiment fell during the 2017-18 and 2022-23 downturns but diverges from prices more often.
Charts run through October 31, 2026, using 30-day smoothing; price z-scores and correlations use 365-day windows.
Values above or below zero indicate unusually positive or negative mood relative to the past year.
A window, not the market
R-RISI makes the narratives of a more speculative retail investor segment observable, rather than measuring all investors.
Its reported relationship with next-day returns is an association, not evidence of causation.
Sentiment also diverges from prices, particularly for Bitcoin.