U.S. stocks experienced positive movement on Tuesday, with the Nasdaq Composite rising approximately 1% as investor sentiment showed signs of recovery. The gains were supported by a rebound in technology stocks, which have been under pressure in recent weeks. This shift comes as the CNN Money Fear and Greed Index indicated a slight easing in overall fear levels, although it remains firmly in the “Fear” zone.
Data from the Federal Housing Finance Agency (FHFA) revealed that the house price index increased by 0.1% in December, a slowdown from a revised gain of 0.7% in November. Additionally, the S&P CoreLogic Case-Shiller home price index showed a year-over-year increase of 1.4% in December, matching the pace recorded in the previous month.
Most sectors within the S&P 500 closed positively, with notable gains observed in consumer discretionary, information technology, and industrials stocks. Conversely, both energy and health care sectors deviated from the upward trend, closing lower for the session. The Dow Jones Industrial Average reported an increase of approximately 370 points, finishing at 49,174.50. The S&P 500 climbed 0.77% to 6,890.07, while the Nasdaq Composite reached 22,863.68, marking a gain of 1.04%.
Understanding the Fear and Greed Index
The CNN Money Fear and Greed Index currently stands at 42.7, indicating that market sentiment is still cautious. This reading represents a slight improvement from the previous score of 37. The index serves as a gauge of prevailing market sentiment, operating on the principle that heightened fear tends to exert downward pressure on stock prices, while increased greed pushes them higher.
The index is derived from seven equally weighted indicators, ranging from 0—indicating extreme fear—to 100, which represents extreme greed. Investors closely monitor this index to assess market dynamics and inform their trading strategies.
As the market continues to react to evolving economic indicators, the recovery of technology stocks and the improvement in investor sentiment could signal a potential shift in market trends in the coming weeks.
