U.S. stocks have declined despite a positive jobs report, as escalating trade tensions have taken precedence. China responded to U.S. tariffs with 34% retaliatory tariffs, contributing to renewed market uncertainty.
The VIX volatility index reached a peak of 45.56% before retracting to 37%, indicating higher trader anxiety and demand for protection.
Market Metrics
At the lowest points, the NASDAQ fell by 21.21% from its December 2024 high, entering bear market territory, while the S&P 500 declined by 15.27% from its February 2025 peak.
Key technical levels for the NASDAQ include support at 15,708.54 and resistance at 16,340.36. For the S&P 500, support is at 5,130.87, with resistance at 5,402.62.
The Nasdaq is likely to close below its 100-day moving average, marking its first weekly close below this level since May 2023. The index has experienced an 8.05% decline this week, the worst performance since March 2020.
The figures laid out above show an abrupt shift in confidence, not only from asset managers but also from those pricing short-term risk. The move in volatility, especially with the VIX having touched above 45%, points to heavier hedging, urgent repositioning, and tighter time horizons for most market exposure. Those levels are rarely reached without either severe uncertainty or disorder in policy outlook, and we are not currently dealing with mechanical errors or shocks—the deterioration appears sentiment-driven.
A drop of over 21% from peak to recent lows on the Nasdaq places the index firmly into bearish territory in both psychological and technical terms. That matters because it often triggers more algorithmic selling, fund rebalancing, or margin adjustments, which can deepen the selling unless confidence returns rapidly. The S&P 500’s retreat of over 15% is too large to ignore and places it within well-defined correction levels.
Technical Analysis
From a technical standpoint, what we’re seeing is more than a temporary shakeout. When major indices dip below long-standing support—especially the 100-day or even 200-day moving averages—it removes a layer of passive inflows that depend heavily on trend sustainability. That’s what we are facing now. A weekly close beneath the Nasdaq’s 100-day implies the path of least resistance could remain downward, barring a strong upside surprise or emergency policy support.
The weekly performance, particularly the largest percentage decline since early 2020, suggests that this is less about traditional valuation fears and more about political instability filtering through asset prices. The sharpness of the drop increases the probability of tactical positioning becoming dislocated—either through stop-outs or via derivatives like index options flipping from net long gamma to short.
As a result, implied volatilities may remain elevated well into next week, especially if early Asian market sessions fail to stabilise risk appetite. In this kind of pricing environment, wide bid/ask spreads and sudden liquidity gaps can become more frequent intraday. Compression trades using ratios or spreads are far more exposed to being caught offside.
Traders should remain sharp on tight stops but also be aware of the knock-on effect if correlations between asset classes widen. This tends to happen when macro events overwhelm sector-specific developments, forcing all assets to respond to headline momentum rather than fundamentals.
Moving towards Monday’s open, it would be unexpected for broad sentiment to shift meaningfully unless clarity from key officials emerges or corporate earnings deliver far above expectations. Until then, skew positioning and the degree of open interest in front-month options must be watched closely. Any change in direction is likely to be sudden, forcing positioning to realign quickly and all but ensuring further intraday volatility.
That means the best approach in these sessions might be selectively defensive rather than heavy on directional conviction. Short-term price discovery is back in the driver’s seat, and in that environment, time decay and delta hedging effects can cause outsized price swings relative to headline news itself. Understanding that, we adjust positioning accordingly, maintain awareness of trigger points, and reduce holding times when the tape speeds up.
