The CNN Money Fear and Greed index showed a sharp decline in the overall market sentiment, while the index moved to the “Fear” zone on Wednesday.

U.S. stocks settled lower on Wednesday, with the Dow Jones index falling for the 10^th session in a row, dipping more than 1,100 points during the session.

Federal Reserve Chair Jerome Powell adopted a hawkish stance during his Wednesday press conference after the December Fed meeting. Although the Federal Reserve lowered interest rates by 0.25% to a range of 4.25%-4.5%, as widely anticipated, the updated economic projections suggest just two potential rate cuts in 2025 — down from four projected in September and fewer than the three anticipated by markets before the meeting.

On the economic data front, the U.S. recorded a current account deficit of $310.9 billion in the third quarter compared to the revised gap of $275.0 billion in the previous period, versus market estimates of a $284 billion gap. U.S. housing starts fell 1.8% to an annualized rate of 1.289 million units in November from 1.312 million in October.

General Mills, Inc. (NYSE:GIS) shares fell around 3% on Wednesday following the release of second-quarter results. Shares of Worthington Enterprises, Inc. (NYSE:WOR) rose around 10% during Wednesday’s session as the company posted better-than-expected results for its second quarter.

All sectors on the S&P 500 closed on a negative note, with consumer discretionary, real estate, and communication services stocks recording the biggest losses on Wednesday.

The Dow Jones closed lower by around 1,123 points to 42,326.87 on Wednesday. The S&P 500 fell 2.95% to 5,872.16, while the Nasdaq Composite declined 3.56% at 19,392.69 during Wednesday's session.

Investors are awaiting earnings results from Accenture Plc. (NYSE:ACN), Nike Inc. (NYSE:NKE), and FedEx Corp. (NYSE:FDX) today.

What is CNN Business Fear & Greed Index?

At a current reading of 33.9, the index moved to the “Fear” zone on Wednesday, versus a prior reading of 50.7.

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.

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