Investor Fears Ramp Up as Another Down Week for Stocks Draws to a Close

• The VIX 'fear gauge' climbed from below 23 to near 30 during the week, while CNN's Fear & Greed Index shows 'Extreme Fear,' reflecting heightened market uncertainty though not panic
• Citi pulled back on its global stock allocation recommendations as 'hopes of a fast resolution to the war fade,' though it remains relatively more positive on U.S. equities
• Apollo's Chief Economist suggests markets are overreacting to what will likely be 4-6 weeks of volatility that could ultimately result in 50 years of stability in oil markets and supply chains

Summary

Market Performance:

U.S. stocks continued their downward trajectory to end the week, with the S&P 500 on track for its fifth consecutive weekly decline and the Nasdaq Composite entering correction territory. Markets extended losses amid escalating investor concerns over geopolitical tensions.

Key Development:

President Donald Trump announced on April 4 a further "pause" on threatened attacks against Iranian energy infrastructure until the evening of April 6, citing ongoing negotiations. The delay has heightened investor fears that the conflict could extend beyond its first month, potentially triggering inflation and higher prices for essential goods and services.

Sentiment Indicators:

Multiple fear gauges signal growing anxiety:

• The VIX ("fear gauge") rose from below 23 to nearly 30 during the week, indicating uncertainty
• CNN's Fear & Greed Index registers "Extreme Fear," intensifying from "Fear" a month earlier
• SentimenTrader's fear/greed model hit levels seen only 31 times since 1998
• AAII survey shows bearishness well above historical averages
• Bitcoin's Crypto Fear & Greed Index reads "Fear" but has improved from early February lows

Institutional Response:

Citi reduced its recommended global stock allocation as "hopes of a fast resolution to the war fade," though maintains relative optimism on U.S. equities. Retail investors have shown reluctance to add positions.

Outlook:

Apollo Chief Economist Torsten Slok suggests markets are overreacting to 4-6 weeks of volatility that could ultimately deliver 50 years of stability in oil markets, supply chains, and geopolitics.