The S&P 500 posted a seventh straight weekly rise, up 0.13%, its longest weekly winning run since 2023. On Friday it fell 1.24%, its worst daily drop since March, as bond yields and oil prices rose.
Other markets fell more over the week, with Europe’s STOXX 600 down 0.85% and Japan’s Nikkei down 2.08%. Friday’s moves included a 1.48% fall in the STOXX 600 and a 1.99% drop in the Nikkei.
Global Markets Turn Cautious
Asian equities moved lower, with the Nikkei down 0.83%, the Hang Seng down 1.35%, the CSI 300 down 0.69%, and the Shanghai Composite down 0.22%. US and European futures also slipped, with S&P 500 futures down 0.60% and DAX futures down 0.94%.
Attention is set to turn to Nvidia’s earnings on Wednesday. Nvidia’s market capitalisation is $5.46tn.
With the S&P 500’s seven-week winning streak now under pressure, we are seeing signs of market fatigue. The index’s worst daily drop since March, despite its longest run of weekly gains since 2023, signals a shift in sentiment. Traders should note this wavering momentum as a potential precursor to increased volatility.
The underlying concern stems from rising bond yields and oil prices, which are stoking stagflation fears. The 10-year Treasury yield recently touched 4.75%, its highest level this year, while WTI crude is now trading above $95 a barrel, pressuring both consumers and corporate margins. These macroeconomic headwinds are making it difficult for equities to continue their upward climb.
Volatility And Hedging Strategies
This nervousness is reflected in the CBOE Volatility Index (VIX), which has jumped from a low of 13 to over 18 in the past ten trading days. Such a sharp increase in expected volatility suggests considering protective strategies through options. This environment makes long-dated put options on broad market indices like the SPY more attractive as a portfolio hedge.
We saw a similar pattern of international weakness preceding a US market correction during the brief sell-off in late 2025. Currently, European and Asian markets are already flashing warning signs, with the STOXX 600 and Nikkei experiencing much steeper declines than their US counterpart. This global risk-off tone suggests the selling pressure could easily spill over more forcefully into US markets.
All eyes are now on Nvidia’s earnings report this Wednesday. Given its massive $5.46 trillion market capitalization, the company’s results and guidance will serve as a major test for the entire tech sector and broader market sentiment. Implied volatility on Nvidia options is extremely high, indicating that traders are positioning for a significant price move in either direction post-announcement.
