The CNN Money Fear and Greed index showed a decline in the overall market sentiment, while the index remained in the “Fear” zone on Wednesday.

U.S. stocks settled lower on Wednesday, with the Dow Jones index falling more than 500 points during the session after the Federal Reserve announced its policy decision.

The Federal Reserve unanimously held the federal funds rate steady at 3.50%-3.75% on Wednesday, as widely expected, in the first policy meeting under new Fed Chair Kevin Warsh.

The Fed’s closely watched dot plot showed that several officials now expect interest rates to rise in 2026. The Fed penciled in higher inflation, a lower unemployment rate and one hike this year, marking a hawkish shift from the March dot plot, which had signaled one additional rate cut.

On the economic data front, U.S. retail sales rose 0.9% month-over-month in May, following a revised 0.4% gain in April and topping market estimates of 0.5%. U.S. pending home sales jumped 3.8% month-over-month in May, compared to a revised 0.3% gain in the previous month and topping market estimates of 0.8%.

CarMax Inc. (NYSE:KMX) reported better-than-expected earnings for the first quarter on Wednesday.

All sectors on the S&P 500 closed on a negative note, with communication services, consumer discretionary and real estate stocks recording the biggest losses on Wednesday.

The Dow Jones closed lower by around 507 points to 51,492.55 on Wednesday. The S&P 500 fell 1.21% to 7,420.10, while the Nasdaq Composite dipped 1.34% at 26,021.66 during Wednesday's session.

Investors are awaiting earnings results from Accenture Plc (NYSE:ACN) and Kroger Co. (NYSE:KR) today.

What Is CNN Business Fear & Greed Index?

At a current reading of 32.7, the index remained in the “Fear” zone on Wednesday, versus a prior reading of 39.1.

The Fear & Greed Index is a measure of the current market sentiment. It is based on the premise that higher fear exerts pressure on stock prices, while higher greed has the opposite effect. The index is calculated based on seven equal-weighted indicators. The index ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greediness.

Photo via Shutterstock