Nasdaq Tumbles 5.5% as AI Stocks Crater: Investor Sentiment Weakens, Fear & Greed Index Moves to ‘Extreme Fear’ Zone

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

U.S. stocks settled lower on Thursday, with the Nasdaq Composite dipping 5.5% during the session amid a renewed rout in artificial-intelligence stocks.

Investors kept unwinding AI trades on bets that the Democratic sweep of Congress will slow data center expansion, while China’s delay in approving imports of Nvidia’s H200 chips and a soft profit outlook from Qualcomm added pressure.

Advanced Micro Devices Inc. (NASDAQ:AMD) dropped 17% and Micron Technology Inc. (NASDAQ:MU) lost 17.5%.

Qualcomm Inc. (NASDAQ:QCOM) slid over 9% after guiding fiscal first-quarter adjusted EPS to $2.15-$2.35, a midpoint below the $2.29 consensus, as fourth-quarter handset revenue fell 26%. Unity Software Inc. (NYSE:U) rallied 15% after guiding fourth-quarter sales to $688 million-$696 million, well above the $603.6 million estimate.

On the economic data front, U.S. initial jobless claims declined by 6,000 to 189,000 in the final week of October, compared to market estimates of 196,000 and versus a revised reading of 195,000 in the previous week. U.S. nonfarm business sector labor productivity rose by 3.6% in the third quarter, beating market estimates of a 2.8% gain. Unit labor costs fell 0.7% in the third quarter, missing market estimates of a 0.6% gain.

All sectors on the S&P 500 closed on a negative note, with consumer discretionary, information technology and industrials stocks recording the biggest losses on Thursday.

The Dow Jones closed lower by around 1,833 points to 51,523.06 on Thursday. The S&P 500 dipped 4.36% to 7,353.73, while the Nasdaq Composite tumbled 5.52% to 24,315.00 during Thursday’s session.

Investors are awaiting earnings results from Charter Communications Inc (NASDAQ:CHTR), Humana Inc (NYSE:HUM) and Fluor Corp (NYSE:FLR) today.

What is CNN Business Fear & Greed Index?

At a current reading of 20, the index moved to the “Extreme Fear” zone on Thursday, versus a prior reading of 34.

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 greed.

Photo via Shutterstock