Markets Inch Towards 'Extreme Fear' On Rising Inflation Concerns

The CNN Money Fear and Greed index showed that sentiment for US equities is inching from a "fear" reading towards the "extreme fear" zone.

Investors await the release of inflation data from the US today. The annual inflation is expected to accelerate further to 8.8% in June, from 8.6% in May, taking the rate to a fresh high since December of 1981. Monthly consumer prices are also expected to rise 1.1% in June, following a 1% increase in the previous month.

US markets moved lower again on Tuesday, with the Dow Jones index shedding more than 190 points in the session. Markets fear prospects of a rise in inflation forcing the US Federal Reserve to raise interest rates by as much as 75 basis points this month.

The emergence of a new Omicron subvariant in China also impacted overall market sentiment on Tuesday, with investors also awaiting earnings from big banks this week. Delta Air Lines, Inc. DAL is scheduled to release earnings on Wednesday.

At a current reading of 26.0, the Fear and Greed index has deteriorated from 27.0 reached on Tuesday. A further rise in the level of fear in markets will send the Fear and Greed index into the "Extreme Fear" territory, exerting more pressure on Wall Street stocks.