Sentiment at Rock Bottom Before Tech Stocks Even Fell

The Fear & Greed gauge read 19.11 on October 23, then 20.98 on October 24 and 25, on a scale of 0 to 100. A sentiment index tells you how investors feel, not why. This week's file nonetheless allows us to reconstruct the pressures that are piling up.

Energy Keeps Inflation Alive

A barrel remains perched around USD 115, with no answer to the supply deficit created by the wars in Ukraine and Iran. In the United States, consumer prices rose 3.7% over twelve months, with gasoline up 34.2% and heating oil up 74.2%. This inflation is not just about energy: it also reflects an economy turbocharged by AI investment.

Central Banks That Keep the Door Open

The Federal Reserve left rates unchanged while keeping the option of a December hike open. The ECB opted for the status quo, and annual euro-area inflation is expected at 3.8%. Markets also anticipate rate hikes from the Reserve Bank of Australia and the Bank of England next week.

When the Cost of AI Becomes a Risk

The mechanism is classic. Higher rates reduce the present value of distant profits, which hits growth stocks first. This week's earnings added doubt about AI profitability. Alphabet lost 12.61% after negative free cash flow of USD 9.1 billion. ServiceNow plunged 33.87% despite revenue up 20.5%, because growth in its order book is expected to slow from 20.5% to 18.5%. Sector financing is feeling it: OpenAI now targets about USD 20 billion on a USD 1.25 trillion valuation, versus USD 30 billion on USD 1.4 trillion the previous month.

Safe-haven assets are not fully benefiting from this climate. Gold hit its lowest level since mid-July, penalized by the prospect of prolonged monetary tightening, while platinum shed 8.6% and palladium 7.7%.

What the Numbers Don't Say

Several limits apply. The sentiment readings date from October 23 to 25: they precede part of the end-of-week shocks, which indicates nervousness was already entrenched. The gold/copper ratio, calculated at 8,874.74 on October 24, cannot be interpreted without a historical series, absent here. Extractions of macroeconomic data and OECD leading indicators did not succeed, so the causal link remains an interpretation, not a statistical test. Finally, fundamentals are not collapsing everywhere: Vertiv posted revenue growth of 61% and SoFi 44%.

A Repricing, Not a Rupture

The reasonable conclusion is a readjustment of the price of risk in the face of energy inflation, potentially higher rates and an AI business model put to the test. Next week will partly settle it: euro-area inflation, US October employment and US midterm elections.

This article was written with the assistance of artificial intelligence and verified by our editorial team.