The vibes are shifting on Wall Street.

Popular gauges of investor sentiment are showing that the pervasive sense of optimism that followed President Donald Trump’s election victory in November has mostly faded. In its place, a creeping sense of uncertainty surrounding the outlook for the U.S. economy has started to emerge.

Evidence of this souring mood has been mounting since at least the beginning of 2025. But investors witnessed the clearest signal yet on Tuesday, when the S&P 500 stumbled for a fourth straight day. If the index finishes in the red, this would mark its longest losing streak since Jan. 2, FactSet data showed.

During this time, highflying momentum stocks like Palantir Technologies Inc. Inc. have been hit especially hard, raising more questions about whether lofty valuations might be contributing to investors’ sense of unease.

Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, first pointed out that the market’s “vibes” appeared to be weakening in a report shared with MarketWatch over the weekend. Others agreed with her assessment.

“I think the market’s mood is slipping, and you can point to a lot of legitimate reasons why,” Callie Cox, chief market strategist at Ritholtz Wealth Management, said during an interview with MarketWatch.

Wall Street professionals pointed to a few reasons that might explain why that is happening. Enthusiasm over Trump’s promised deregulation and tax cuts appears to have been superseded by fears that tariffs and an immigration crackdown could dampen economic growth while boosting prices, causing stagflation fears to re-emerge.

Even high-profile investors like New York Mets owner Steve Cohen, the founder of Point72 Asset Management, have reportedly warned that stocks could be headed for an imminent correction.

Investors received another jolt on Tuesday when the Conference Board’s consumer-confidence survey slipped to an eight-month low, sparking the latest bout of stock-market weakness.

Cox and others who spoke or shared commentary with MarketWatch pointed to six charts that they said highlight investors’ increasingly cautious outlook.

Bull-bear spread declines

Every week, the American Association of Individual Investors publishes a survey of nonprofessional investors to gauge their expectations about where the market might be headed.

Recently, the results have reflected growing trepidation. Earlier this month, respondents expressing a bearish outlook surpassed the bulls by nearly 19 percentage points, the widest such spread since early November 2023.

Some investors, including Fundstrat’s Tom Lee, have said this downbeat sentiment could, perhaps counterintuitively, be a bullish signal. From time to time, markets must climb a “wall of worry,” and in the past, extreme readings in one direction or the other have sometimes signaled that a change in trend could be near.

But there is one major difference between now and November 2023, when the survey was last at these levels: Back then, stocks were just starting to crawl back from a 10% correction that hit its nadir as Treasury yields briefly pushed past 5%.

By comparison, on Tuesday the S&P 500 was still within a few percentage points of its record high.

Defensive stocks take the lead

Shares of defensive stocks like healthcare and consumer staples have raced ahead in 2025. Since the start of the year, these two sectors have been the top performers on the S&P 500, FactSet data showed.

Meanwhile, the The Magnificent Seven ETF, an exchange-traded fund that tracks the performance of the elite group of megacap tech stocks, was on track to finish in correction territory on Tuesday.

“I think it’s important to point out that defensive stocks are leading the S&P 500 higher this year, which probably tells you something about how positioning is changing,” said Ritholtz’s Cox.

Demand for hedges soars

The options market can often provide valuable insights about where traders think stocks might be heading next.

Now may be one of those times. According to the Cboe Skew Index, demand for out-of-the-money puts tied to the S&P 500 has surged, suggesting a fair amount of trepidation. The gauge climbed above 183 last week, touching its highest level since at least 2005, according to Cboe data.

Bearish put options give the holder the right, but not the obligation, to sell the underlying security or currency, although options tied to stock-market indexes are typically cash-settled.

Out-of-the-money puts would ordinarily pay off if stocks saw a sudden sharp decline.

Bonds are rallying as investors seek safety

Bonds are rallying, but not for the right reasons, as MarketWatch’s Vivien Lou Chen reported earlier.

Rather than reflecting a growing conviction that inflation will soon retreat back below the Federal Reserve’s 2% target, the decline in the 10-year Treasury yield to its lowest level of 2025 suggests investors are growing increasingly worried about the outlook for the U.S. economy, as the Trump administration lays off thousands of government employees.

“Yields in the bond market are tumbling as they smell recession in the air,” said Chris Rupkey, chief economist at FwdBonds, in commentary shared with MarketWatch on Tuesday.

The yield on the 10-year Treasury note traded as low as 4.31% on Tuesday, its lowest level since Dec. 12, FactSet data showed.

If there is a silver lining here, it’s that bonds are once again offsetting losses in stocks, a dynamic that has been largely absent over the past three years.

Economic reports leave investors disappointed

For the first time since September, the Citi U.S. Economic Surprise Index has been consistently negative. The gauge has issued negative readings over the past four days, as a disappointing reading on U.S. services-sector activity was followed up on Tuesday with another disheartening decline in U.S. consumer confidence.

If something doesn’t change soon, stocks could see a repeat of the Aug. 5 rinsing, when a U.S. “growth scare” collided with the unwinding of the Japanese yen carry trade. The result was a shellacking for global stocks, noted Charlie McElligott, a cross-asset strategist at Nomura.

“Markets have shown extreme sensitivity to any semblance of surprise downside” in recent economic reports, McElligott said in commentary shared with MarketWach on Monday.

While data hint at a slowdown in consumer spending and services-sector activity, rising inflation expectations are contributing to a “stagflation vibe” that has suffused markets.

Bitcoin slides as gold climbs

Bitcoin has often been touted as “digital gold” by believers, but increasingly, the pioneering digital currency has been moving in a different direction from its physical rival.

Gold futures were trading at a record high just shy of $3,000 an ounce earlier this week. By comparison, bitcoin prices have been moving lower. Bitcoin was trading just below $87,000 recently, its lowest level since November.

Many on Wall Street, including Stifel’s Barry Bannister, have observed that bitcoin tends to trade more like a speculative growth stock than a defensive asset like gold.

‘People are adding protection’

Some indicators still look fairly benign. The Conference Board CEO Confidence Survey, released last week, topped its levels from the fourth quarter, hinting that the vibes in C-suites across the U.S. have remained unperturbed.

Futures traders’ willingness to bet against the S&P 500 also appears to have eased. Data from the Commodity Futures Trading Commission showed that the size of the net-short position in S&P 500 e-mini futures has fallen in recent weeks, although it remains pretty steep relative to history.

The Cboe Volatility Index, better known as the VIX or Wall Street’s fear gauge, briefly topped 20 on Tuesday. But so far, it has remained below its intraday peak from Jan. 27, when U.S. artificial-intelligence-related names sold off hard as investors responded to claims made by China’s DeepSeek that it had nearly matched sophisticated U.S. AI models at a fraction of the cost.

The VIX reflects demand for out-of-the-money options tied to the S&P 500 that are set to expire over the coming month or so.

“People are adding protection, and I think it makes sense,” said Danny Kirsch, head of options trading at Piper Sandler, during an interview with MarketWatch.

Both the S&P 500 and Nasdaq Composite were heading for a lower finish on Tuesday, with the latter down more than 1% at 19,077 in recent trading. Meanwhile, the Dow Jones Industrial Average was up nearly 200 points, or 0.4%, at 43,645.