Fear Among US Investors Is Increasing, Here's Why

The CNN Money Fear and Greed index showed a rise in the fear level among U.S. investors after the Dow Jones closed lower by around 300 points on Tuesday.

The Federal Open Market Committee started its two-day policy meeting on Tuesday. Investors are bracing for another big rate increase from the Federal Reserve today.

Traders are also keeping an eye on the Fed’s projections from the policy meeting today.

On the economic data front, housing market data showed a surprise surge in starts, while building permits recorded the biggest drop since April 2020.

The Dow dropped 1.01% to close at 30,706.23 on Tuesday. The S&P 500 fell 1.13% to 3,855.93, while the Nasdaq Composite declined 0.95% to settle at 11,425.05 in the previous session.

Investors are now awaiting earnings results from General Mills, Inc. GIS, Lennar Corporation LEN and KB Home KBH, scheduled for release today.

At a current reading of 34.0, the index remained in the "fear" zone, following a previous reading of 37.0.

What is CNN Business Fear & Greed Index?

The 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. The index ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greediness.