The CNN Money Fear and Greed index, a measure of market sentiment, showed a decline in overall sentiment on Wednesday as it moved into the “Greed” zone. This shift in sentiment comes as U.S. stocks closed lower following the release of the Federal Reserve’s minutes.
The minutes from the December meeting revealed that policymakers acknowledged that interest rates are likely at or near the cycle’s peak. This indicates a potential shift in monetary policy as the economic landscape evolves. This news had an impact on the market, with the Nasdaq Composite recording losses for a fourth straight session.
Despite the recent decline, major indices experienced significant gains in 2023. The S&P 500 surged over 24% and the Nasdaq gained 43% throughout the year. However, on Wednesday, shares of UniFirst Corporation (UNF) fell around 7% after the company released its first-quarter earnings.
In terms of economic data, the number of job openings fell in November, while the ISM manufacturing PMI rose in December. The recent reading of the PMI still signaled a contraction in factory activity for the 14th consecutive month.
Most sectors on the S&P 500 closed on a negative note, with real estate and consumer discretionary stocks recording the biggest losses. However, energy and utilities stocks bucked the trend, closing the session higher.
On Wednesday, the Dow Jones closed lower by around 285 points, the S&P 500 fell 0.80%, and the Nasdaq Composite fell 1.18%. Investors are now awaiting earnings results from Lamb Weston Holdings, Inc. (LW), Conagra Brands, Inc. (CAG), and Walgreens Boots Alliance, Inc. (WBA).
The CNN Business Fear & Greed Index is a measure of the current market sentiment. It is based on the premise that higher fear exerts pressure on stock prices, while higher greed has the opposite effect. The index is calculated based on seven equal-weighted indicators, ranging from 0 to 100. A reading of 0 represents maximum fear, while 100 signals maximum greediness.
In conclusion, the market sentiment, as indicated by the CNN Money Fear and Greed index, has shifted towards the “Greed” zone. This comes as U.S. stocks closed lower following the release of the Federal Reserve’s minutes, which suggested a potential shift in monetary policy. Despite the recent decline, major indices experienced significant gains in 2023. Investors are now closely watching earnings results and economic data for further market insights.
