Why stock investors are suddenly so scared

Many investors are running a sizable profit this year – the S&P 500 is about 14% higher in 2023. But market losses have been piling up over the past month, particularly on growing fears of contagion from an economic slowdown in China. Inflation, Russia’s war in Ukraine and weakness in America’s banks also have Wall Street spooked.

The Nasdaq has dropped by 7.7% in August and the S&P 500 is down nearly 5% this month. On Thursday, the Dow closed lower than its 50-day moving average, a key threshold that investors often interpret as a bearish signal. The index is down 3% this month.

The CNN Business Fear & Greed Index, which looks at seven indicators of market sentiment, is showing signs of fear on Friday for the first time since March. That’s a big change from just one month ago, when the index was in “extreme greed” territory.

So what’s going on? China’s economy is in trouble and its souring economy spells bad news for US stocks, and potentially for your portfolio.

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Article URL : https://www.cnn.com/2023/08/18/investing/fear-and-greed-investors/index.html