From FOMO to Fatigue: The Post-Hype Market Mood

2025 has been a volatile year — at least the start of it was. Yet, despite the turbulence, stocks continued to climb.

As of October 12, the U.S. market marks the third anniversary of the current bull run. But even with indexes sitting near record highs, investor sentiment is starting to weaken. Momentum is cooling, inflation is lingering, and enthusiasm has given way to hesitation.

· S&P 500: Up 7.9% in Q3, slowing from 10.57% in Q2 — clear signs of fading momentum.
· NASDAQ: Gained 11% in Q3, down from nearly 18% growth the prior quarter.
· Inflation: August CPI up 2.9% YoY — down from 2022’s 9.1% peak but still above the Fed’s 2% target.
· Fear & Greed Index: Now at 54 (“Neutral”), down from 73 (“Greed”) a year ago — showing sentiment cooling sharply.
· Consumer Sentiment: University of Michigan index fell to its seventh-lowest level since data began in 1952.

When investors grow cautious even as markets rise, it’s often a sign the cycle is maturing. Inflation remains elevated, the economy is slowing, and the Fed’s recent rate cuts may not be enough to revive optimism.

If growth continues to cool, the central bank could be trapped — unable to cut further without reigniting inflation, but unable to hike without stalling the economy. Historically, that combination leads to lower corporate earnings and softer equity returns.

Investor behavior is already reflecting the mood shift:
· Fixed-income ETFs saw $77 billion in inflows in August.
· Corporate bond funds recorded their largest inflows since June 2020.
· Cash and gold holdings rose — classic “flight to safety” positioning.

Together, these moves signal a defensive pivot — a quiet retreat from the “FOMO” of early 2025 to a posture of caution and capital preservation.

The market’s tone has clearly changed. The euphoria of past quarters has turned into measured fatigue, as investors brace for slower returns.

But the experts are clear: long-term success depends on staying invested. As Fidelity notes, missing just the five best days in the market since 1988 could have cut long-term returns by 37%.

FOMO may be fading, but fear shouldn’t take its place. The next market high often arrives when sentiment feels its lowest — and no one rings a bell to announce it.

— Lauren Brown
Editor, American Ledger