The S&P500 has had an incredible decade of gains, but can the momentum be derailed? | Source:: AP Photo/Richard Drew, File
The S&P 500 (SPX) is just three months away from closing the book on an incredible decade. While the index has made gains over the last few days, it appears that we are witnessing the beginning of the end.
Even investors are starting to feel jittery.
A look at the Fear and Greed Index provided by CNN shows that fear is driving the market right now. Also, a closer look at the S&P 500 index reveals that greed levels have been gradually dropping while fear levels are making new lows in the last two years.
Market sentiment slowly shifting to fear | Source: CNN
Investors are seeing numerous concerns, any one of which could trigger a massive sell-off. Recent reports on manufacturing and housing data do not inspire confidence.
Factory Slowdown Heightens Fears of Recession
The contraction of a U.S. manufacturing measure could be a signal of a weakening economy. The Institute for Supply Management’s purchasing manager’s index (ISM Manufacturing Index) is a leading indicator that affects investor confidence, which can then translate to poor performance in the overall stock market; including the S&P 500 Index. The ISM Manufacturing Index dropped to 49.1 in August. This is a significant development as any number below 50 indicates a shrinking manufacturing economy according to Bloomberg.
The ISM manufacturing index breaks a crucial level | Source: Bloomberg
Many sectors rely heavily on manufacturing. For every dollar spent in manufacturing, an additional $1.82 is added to other sectors such as transportation,