U.S. equities closed sharply mixed on Thursday, with the Nasdaq Composite tumbling 2.60% to 26,008.86 points, marking its worst single-day performance since June.
Although initial jobless claims fell to 194,000, well below the 200,000 consensus estimate and the prior reading, and the Conference Board's September leading index came in flat instead of the expected 0.2% decline, signaling that economic fundamentals remain resilient, investor sentiment deteriorated rapidly.
The Fear and Greed Index published by CNN Money dropped abruptly from 27 to 20, officially entering the "extreme fear" zone, marking a sharp contraction in market risk appetite.
The technology sector became the primary drag on the broader market, with several leading companies seeing their shares plunge following earnings releases.
Meta Platforms, Inc. (META.US), formerly Facebook, fell roughly 7% after reporting quarterly results, while Advanced Micro Devices (AMD.US) and NVIDIA (NVDA.US) also posted steep declines; Tesla (TSLA.US) dropped about 3% after releasing its third-quarter earnings.
Data compiled by Woofun AI shows that communication services and information technology stocks within the S&P 500 were the weakest performers, dragging the index down 1.21% to 7,663.43 points.
By contrast, capital flowed into defensive sectors, with consumer staples, utilities, and healthcare stocks posting the largest gains, lifting the Dow Jones Industrial Average by about 12 points to 52,867.98 points, displaying clear risk-aversion characteristics.
This divergence between "improving economic data" and "extremely fearful market sentiment" reveals the structural contradictions in the current market.
The Fear and Greed Index is calculated based on seven equally weighted indicators, with values ranging from 0 to 100, where 0 represents extreme fear and 100 represents extreme greed.
Its underlying principle is that excessive fear puts pressure on stock prices, while excessive greed produces the opposite effect.
The current index reading of 20 means the market is already in an extremely pessimistic state, with investors' concerns about high tech valuations overwhelming positive macroeconomic signals.
Such an extreme sentiment reversal often foreshadows further amplification of short-term volatility.
As the market enters the "extreme fear" zone, investors are turning their attention to upcoming earnings reports for direction.
Earnings releases today from SLB NV (SLB.US), Booz Allen Hamilton Holding Corp. (BAH.US), and American Express Company (AXP.US) will become key focal points.
It is worth noting that despite strong employment data, the collective pullback in tech giants has reshaped short-term risk appetite.
This is the first time since June that the market has seen such a dramatic tech-led selloff, indicating that amid elevated valuations and macroeconomic uncertainty, capital is accelerating its shift from growth assets to defensive assets.
Future direction will depend on whether corporate earnings can disprove the current panic sentiment.
Comments