S&P500: Early Gains Reversed as VIX Spike Signals Rising Market Fear Today

Wall Street Slides as Early Gains Vanish; Traders Grapple with Volatility and Trade Tensions

U.S. equities reversed earlier gains Thursday, weighed down by renewed geopolitical concerns, mixed corporate earnings reactions, and a lack of fresh economic data due to the ongoing government shutdown. The Dow dropped 317 points, or 0.7%, while the S&P 500 and Nasdaq both declined 0.7%, giving back morning momentum.

The retreat came as the Cboe Volatility Index surged to its highest level since May, and 10-year Treasury yields dipped near 4%. The U.S. Dollar Index fell 0.3%, reflecting broader investor uncertainty around policy decisions and geopolitical headlines.

Why did stocks roll over after a promising start?

Several major names that led early in the session fell from their highs. Salesforce remained a standout, climbing 4.2% on strong long-term guidance, but Nvidia, Broadcom, and Micron—initially higher—gave back part of their gains. Micron still ended up 4.6% following a bullish UBS call, while Nvidia was up just 0.3% late in the session.

Many other stocks turned lower. CrowdStrike dropped 2.2%, Datadog fell 0.8%, and Apple declined 1.0%. Trade Desk, Linde, and Airbnb were among other notable laggards. Meanwhile, mega-cap names like Microsoft and Alphabet saw muted action, up or down less than 1%.

Are sector declines signaling deeper pressure?

Sector performance reflected broader weakness. Financials fell 2%, industrials dropped 0.9%, and consumer discretionary lost nearly 1%. Even with energy prices stabilizing, the energy sector slipped 0.75%. Only real estate held modest gains.

This retreat followed a brief earnings-fueled rally earlier in the week. While big banks like Bank of America and Citi initially rallied on results, both turned negative Thursday, falling 1% and 1.7%, respectively. JPMorgan, Morgan Stanley, and Goldman Sachs also gave up ground.

How are trade tensions and the shutdown distorting sentiment?

President Trump’s escalating rhetoric on China—including a threat of 100% tariffs and a proposed cooking oil ban—has injected renewed uncertainty into markets. These developments, paired with the ongoing federal shutdown, have suspended critical economic data releases, limiting visibility for traders assessing consumer resilience and labor market strength.

What’s the trading outlook as earnings season continues?

While select earnings beats—particularly from tech—are supporting parts of the market, the broader picture is weakening. Narrow leadership and increased volatility suggest the market may struggle to sustain gains without broader sector participation or easing in political risks.

With no immediate resolution to the shutdown and trade tensions simmering, traders may face more downside pressure near term. Sentiment leans bearish until clarity emerges on key policy fronts and earnings breadth improves.

More Information in our Economic Calendar.