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Market Sentiment Shifts to Neutral as Dow Surges on Defense Stock Rally

MarketDash Editorial Team
2 days ago
The CNN Fear & Greed Index moved into neutral territory on Thursday as U.S. markets rallied, with the Dow gaining over 250 points. Defense contractors jumped after President Trump proposed a major increase in military spending, while economic data showed improving jobless claims and a narrowing trade deficit.

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If you're watching market sentiment indicators, Thursday brought some good news. The CNN Money Fear and Greed Index climbed to 46.0 from 43.7, officially entering "Neutral" territory after hanging out in the "Fear" zone. And the market action backed it up—U.S. stocks closed mixed, with the Dow Jones jumping more than 250 points.

Defense stocks were the stars of the show, completely erasing Wednesday's losses after President Donald Trump floated the idea of a sharp increase in U.S. military spending. Wall Street perked up immediately. Small-cap defense contractors led the charge: Kratos Defense & Security Solutions, Inc. (KTOS) soared 14%, while Red Cat Holdings, Inc. (RCAT) gained 13%. Karman Holdings Inc. (KRMN) rose 10%.

On the economic data front, things looked reasonably steady. U.S. initial jobless claims increased by 8,000 from the previous week to 208,000 in the week ending Jan. 3, compared to market expectations of 210,000. More interesting was the trade deficit, which shrank to $29.4 billion in October—the smallest gap since June 2009. That's a dramatic improvement from September's revised $48.1 billion gap and well below market estimates of a $58.1 billion shortfall.

Most sectors on the S&P 500 closed higher, with energy, consumer staples, and consumer discretionary stocks recording the biggest gains on Thursday. Health care and information technology stocks bucked the trend, closing lower and dragging down the broader tech-heavy Nasdaq.

By the closing bell, the Dow Jones had climbed around 270 points to 49,266.11. The S&P 500 rose a modest 0.01% to 6,921.46, while the Nasdaq Composite declined 0.44% to 23,480.02.

Understanding the Fear & Greed Index

So what exactly is the CNN Business Fear & Greed Index? Think of it as Wall Street's mood ring. The index measures current market sentiment based on the premise that higher fear puts pressure on stock prices, while higher greed pushes them up. It's calculated using seven equal-weighted indicators and ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greed. Thursday's reading of 46.0 puts the market right in the middle—not scared, not euphoric, just neutral.

Back to Stock Market News

Market Sentiment Shifts to Neutral as Dow Surges on Defense Stock Rally

MarketDash Editorial Team
2 days ago
The CNN Fear & Greed Index moved into neutral territory on Thursday as U.S. markets rallied, with the Dow gaining over 250 points. Defense contractors jumped after President Trump proposed a major increase in military spending, while economic data showed improving jobless claims and a narrowing trade deficit.

Get Karman Holdings Alerts

Weekly insights + SMS alerts

If you're watching market sentiment indicators, Thursday brought some good news. The CNN Money Fear and Greed Index climbed to 46.0 from 43.7, officially entering "Neutral" territory after hanging out in the "Fear" zone. And the market action backed it up—U.S. stocks closed mixed, with the Dow Jones jumping more than 250 points.

Defense stocks were the stars of the show, completely erasing Wednesday's losses after President Donald Trump floated the idea of a sharp increase in U.S. military spending. Wall Street perked up immediately. Small-cap defense contractors led the charge: Kratos Defense & Security Solutions, Inc. (KTOS) soared 14%, while Red Cat Holdings, Inc. (RCAT) gained 13%. Karman Holdings Inc. (KRMN) rose 10%.

On the economic data front, things looked reasonably steady. U.S. initial jobless claims increased by 8,000 from the previous week to 208,000 in the week ending Jan. 3, compared to market expectations of 210,000. More interesting was the trade deficit, which shrank to $29.4 billion in October—the smallest gap since June 2009. That's a dramatic improvement from September's revised $48.1 billion gap and well below market estimates of a $58.1 billion shortfall.

Most sectors on the S&P 500 closed higher, with energy, consumer staples, and consumer discretionary stocks recording the biggest gains on Thursday. Health care and information technology stocks bucked the trend, closing lower and dragging down the broader tech-heavy Nasdaq.

By the closing bell, the Dow Jones had climbed around 270 points to 49,266.11. The S&P 500 rose a modest 0.01% to 6,921.46, while the Nasdaq Composite declined 0.44% to 23,480.02.

Understanding the Fear & Greed Index

So what exactly is the CNN Business Fear & Greed Index? Think of it as Wall Street's mood ring. The index measures current market sentiment based on the premise that higher fear puts pressure on stock prices, while higher greed pushes them up. It's calculated using seven equal-weighted indicators and ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greed. Thursday's reading of 46.0 puts the market right in the middle—not scared, not euphoric, just neutral.