MW S&P 500 turns negative for 2026 as investors add job market to a growing list of worries facing Wall Street

By Joy Wiltermuth and Gordon Gottsegen

S&P 500 index tumbles 1.2%. 'The volatility is communicating like an upset stomach - don't ignore it,' one analyst says.

The S&P 500 index fell into negative territory for the year on Thursday, while Wall Street's "fear gauge" hit a 2026 high.

The action in stocks on Thursday showed just how quickly simmering concerns in one corner of the market can boil over into a large-scale rout.

Nine out of the S&P 500's 11 sectors fell on Thursday after labor data pointed to rising layoffs and a big drop in job openings in December, casting doubt on recent optimism around the economy. The S&P 500 SPX fell 1.2%, slipping into negative territory year to date. Meanwhile, the Dow Jones Industrial Average DJIA ended the day 1.2% lower and the Nasdaq Composite COMP dropped 1.6%.

"The whole narrative has been about an uptick in the economy," said Keith Lerner, chief investment officer at Truist Advisory Service. "Now all of the sudden, we are seeing more weakness in the jobs market."

Job-openings data for the final month of 2025 came in at just 6.5 million - the lowest since the 2020-'21 era. That threw off small-cap stocks in the Russell 2000 index RUT and the other parts of the "rotation trade," which has been helping industrial, defense and transportation stocks outshine tech early this year.

Heavy selling also hit the "Magnificent Seven" megacap tech stocks as investors have been picking their favorites in the AI race. Microsoft Corp. $(MSFT)$ fell deeper into a bear market as shares closed more than 27% below their Oct. 28 peak, according to Dow Jones Market Data.

This comes as shares of Alphabet Inc. $(GOOG)$ $(GOOGL)$, Apple Inc. $(AAPL)$, and Meta Platforms Inc. (META) were still up for the year, despite the growing risks that AI could also sideline many software stocks.

Read: Software ate the world. Now, Wall Street is worried AI will eat software.

"I think it's a long time coming," said Melissa Brown, head of investment-decision research at SimCorp. "I probably expected a correction in tech or AI, but not necessarily for it to be accompanied by a huge correction in metals or crypto."

Until recently, gold (GC00) and silver (SI00) were surging into ever higher record territory as investors bet on a "commodity supercycle" taking shape. Others have been seeking metals as havens and a way to diversify away from dollar-denominated debt. Yet that momentum led to a painful unwind a week ago, when a historic selloff broke out. Gold and silver prices also fell on Thursday, with silver down over 14%.

Then came fresh selling in bitcoin (BTCUSD), which plunged below $63,000 on Thursday - that's 50% below the $126,272.76 record high it hit on Oct. 6, 2025, according to FactSet. Its slide was accompanied by Wall Street's "fear gauge," the Cboe Volatility Index, VIX hitting a fresh year-to-date high of 21.77 on Thursday, which could signaling volatility may be sticking around.

"The volatility is communicating like an upset stomach - don't ignore it. There's something going on there and you better recognize it," Ben Fulton, chief executive of WEBs Investments, told MarketWatch.

"If you think you've weathered the storm, we're probably not through it all. If you can't handle it, consider lightening up your positions," he added.

The hope has been that after a tech-centric bull market over the past three years, the other areas of the stock market could pick up the mantle and breathe new life into the rally.

That's going to be a bigger lift now that the S&P 500 index has turned negative for the year. A big part of its weakness has come from the S&P 500's information-technology XX:SP500.45 sector, which entered a correction on Wednesday when it ended 11.2% below its Oct. 29 peak, according to Dow Jones Market Data.

Assets officially enter a correction when they close at least 10% below their previous high.

So, where can investors hide other than cash? Utilities stocks and the consumer-staples segment posted modest gains Thursday, while other investors flocked to Treasurys.

Longer-duration Treasury yields tumbled, signaling investors were back buying 10-year BX:TMUBMUSD10Y and 30-year BX:TMUBMUSD30Y U.S. government debt.

Then again, another $13.1 billion was socked away in U.S. money-market funds in the past week, bringing the sector's assets under management to $7.7 trillion, the Investment Company Institute said Thursday.

Read: This explains silver's tumble as gold finds a footing in precious-metals rout

-Joy Wiltermuth -Gordon Gottsegen

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February 05, 2026 17:27 ET (22:27 GMT)

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