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

U.S. stocks settled lower on Tuesday, with the Nasdaq Composite falling more than 300 points during the session as geopolitical tensions in the Middle East resurfaced.

U.S. officials told Reuters that American forces shot down an Iranian drone that approached a U.S. Navy aircraft carrier in the Arabian Sea.

On the economic data front, the Logistics Manager’s Index surged to 59.6 in January, recording the highest level in seven months, and compared to 54.2 in December.

Most sectors on the S&P 500 closed on a negative note, with information technology, communication services and health care stocks recording the biggest losses on Tuesday. However, materials and energy stocks bucked the overall market trend, closing the session higher.

The Dow Jones closed lower by around 167 points to 49,240.99 on Tuesday. The S&P 500 fell 0.84% to 6,917.81, while the Nasdaq Composite dipped 1.43% at 23,255.19 during Tuesday's session.

What Is CNN Business Fear & Greed Index?

At a current reading of 41.3, the index moved to the “Fear” zone on Tuesday, versus a prior reading of 49.9.

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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