Here's something curious: stocks rallied hard on Thursday, the Nasdaq jumped over 300 points, and investors still got more nervous. The CNN Fear & Greed Index slipped to 43.7 from 46.9, officially entering "Fear" territory even as markets celebrated some genuinely good news.

U.S. stocks finished Thursday's session higher across the board, with the Nasdaq Composite leading the charge with gains of more than 300 points. The catalyst? A cooler-than-expected inflation report that revived hopes for interest rate cuts, combined with a stellar earnings report from Micron Technology Inc. (MU) that helped calm worries about an AI spending bubble.

Micron Technology rocketed 10% higher after crushing earnings estimates and delivering a bullish outlook for the quarters ahead. Accenture Plc (ACN) also posted better-than-expected first-quarter fiscal 2026 results, adding to the positive momentum.

The inflation news was genuinely encouraging. The Consumer Price Index rose 2.7% year-over-year in November 2025, cooling from October's 3% reading and coming in well below the 3.1% economists were expecting. Even better, core inflation—which strips out volatile food and energy prices—dropped from 3% to 2.6% annually. That's the lowest core inflation reading since March 2021, which feels like a lifetime ago in economic terms.

Other economic data was more mixed. The Philadelphia Fed Manufacturing Index fell 8.5 points to a reading of -10.2 in December, worse than November's -1.7 and missing market estimates of -3.1. On the employment front, initial jobless claims fell by 13,000 to 224,000 in the week ending December 13, suggesting the labor market remains resilient.

Most sectors of the S&P 500 finished in positive territory. Information technology, communication services, and consumer discretionary stocks posted the biggest gains on Thursday. Consumer staples and energy stocks were the outliers, bucking the broader trend and closing lower.

By the closing bell, the Dow Jones inched up around 66 points to 47,951.85. The S&P 500 rose 0.79% to 6,774.76, while the Nasdaq Composite jumped 1.38% to close at 23,006.36.

Looking ahead, investors are waiting on earnings results from Conagra Brands Inc. (CAG), Paychex Inc. (PAYX), and Carnival Corp. (CCL).

Understanding the Fear & Greed Index

So why did investor sentiment slip into fear even as markets rallied? The CNN Business Fear & Greed Index is designed to capture the emotional temperature of the market, and emotions don't always track perfectly with daily price movements.

The index operates on a straightforward premise: excessive fear tends to push stock prices down, while excessive greed drives them higher. It calculates sentiment using seven equal-weighted indicators, producing a score between 0 and 100. Zero represents maximum fear, 100 signals maximum greed, and Thursday's reading of 43.7 puts us firmly in cautious territory.

Sometimes the market goes up and investors still feel nervous. That's where we are now.