Investors' fears of a stock market crash, similar to the one in 1987, are the highest since the pandemic, with 44% of institutional investors believing that such a crash has at least a 10% chance of occurring in the next six months.
Investors are becoming increasingly nervous due to concerns about the Fed potentially increasing interest rates, as well as rising 10-year interest rates and the VIX, which may put pressure on stocks; however, there are also positive factors emerging, such as improving S&P 500 profit estimates and a shift away from data dependence by Fed officials, which suggests a better finish to September is probable.
Investors are becoming increasingly cautious about the US stock market and the economy as 2023 draws to a close, leading to a more defensive investment approach by Wall Street banks and experts warning of potential pain ahead.
Market volatility in 2023 has reached its lowest point since 2020, with the CBOE Volatility Index (VIX) falling to pre-pandemic levels, and factors such as moderating inflation and a strong labor market contributing to the market's relative calmness.
Investors are increasingly fearful due to a mix of factors including rising oil prices, expectations of higher interest rates, a sluggish Chinese economy, and the possibility of a US government shutdown, leading to concerns of a prolonged period of stagflation and a potential recession.
Investors are likely to continue facing difficulties in the stock market as three headwinds, including high valuations and restrictive interest rates, persist, according to JPMorgan. The bank's cautious outlook is based on the surge in bond yields and the overhang of geopolitical risks, which resemble the conditions before the 2008 financial crisis. Additionally, the recent reading of sentiment indicators suggests that investors have entered a state of panic due to high interest rates.
Fears surrounding the Federal Reserve's actions have caused panic among investors, leading to disorder in the bond market with the 10-year US Treasury yield reaching a 16-year high.
Amid concerns about high oil prices, sticky inflation, and rising wages, investors may be poised to panic, but a closer look reveals a more positive long-term outlook with solid job market, moderating inflation, and decent growth.
Wall Street's fear gauge, the Vix, reached its highest level of the year as stock options tied to $2.5 trillion in market value are set to expire, indicating potential volatility ahead in the stock market.
The Cboe Volatility Index (VIX), a measure of expected stock-market volatility, reached its highest level since March, but analysts suggest it's not a buy signal as support levels for the S&P 500 index are being tested.
The financial markets experienced heightened caution, with volatility surging by approximately 10% and reaching the highest level in six months, due to escalating conflicts between Israel and Gaza and the interception of missiles from Yemen by the US Navy.
The fear and anxiety in China's stock market is currently at its highest level in a year, with the Fear and Greed indicator for the Shanghai Composite index falling to its lowest level since October 2022.
The Crypto Fear & Greed Index has reached levels not seen since the peak of the crypto market rally in November 2021, indicating a return of market sentiment similar to when Bitcoin reached $69,000.
The Crypto Fear & Greed Index has reached its highest level since November 2021, indicating investor greed and potentially suggesting a pause in Bitcoin's recent bullish run.
