The Greed Index falls to 20: a sharp drop in tech stocks detonates Nasdaq's worst day since June

According to Woofun AI, the US stock market was sharply divided on Thursday, and the Nasdaq Composite Index plummeted 2.60% to 26,008.86 points, recording the worst single-day performance since June. Although the number of initial jobless claims fell to 194,000, significantly lower than the consensus estimate of 200,000 and the previous value, and the Conference Committee's September Leading Index remained flat rather than the expected 0.2% decline, indicating that economic fundamentals are still resilient, investor sentiment deteriorated rapidly. The fear and greed index published by CNN Money plummeted from 27 to 20, officially falling into the 'extreme fear' range, marking a sharp contraction in the market's risk appetite.

The technology sector became the core force dragging down the market, and the stock prices of many leading companies fell sharply after financial reports. Meta (META.US) (formerly Facebook) shares fell about 7% after announcing quarterly earnings, and AMD (AMD.US) and Nvidia (NVDA.US) also fell sharply; Tesla (TSLA.US) shares fell about 3% after the release of the third quarter earnings report.

According to data compiled by Woofun AI, communications services and information technology stocks in the S&P 500 index performed the weakest, causing the overall index to drop 1.21% to 7,663.43 points. In contrast, capital poured into the defensive sector, with consumer necessities, utilities, and healthcare stocks rising the most, driving the Dow Jones index up slightly by about 12 points to 52,867.98 points, showing clear safe-haven characteristics.

This divergence between “positive economic data” and “extreme fear of market sentiment” reveals the structural contradictions in the current market. The Fear and Greed Index is calculated based on seven equally weighted metrics, with values ranging from 0 to 100, where 0 represents extreme fear and 100 represents extreme greed. The basic principle is that excessive fear puts pressure on stock prices, while excessive greed has the opposite effect. The current index value is 20, which means that the market is already in an extremely pessimistic state, and investors' concerns about the overvaluation of technology stocks have overwhelmed positive macroeconomic signals.

This extreme reversal of sentiment often indicates a further increase in short-term volatility.

As the market entered the 'extreme fear' range, investors turned their eyes to subsequent earnings reports to find direction. Today's earnings releases from SLB NV (SLB.US), Booz Allen Hamilton Holding Corp. (BAH.US), and American Express (AXP.US) will be a key observation point.

Notably, despite strong employment data, the tech giants' collective pullback has reshaped short-term risk appetite. This is the first time since June that the market has experienced such a sharp decline in technology stocks, indicating that capital is shifting rapidly from growth assets to defensive assets due to the intertwining of high valuations and macroeconomic uncertainty. Future trends will depend on whether corporate profits can falsify current fears.