No two risk-off episodes are exactly alike, but several factors make this one unique, investors tell MarketWatch

To say that U.S. stocks have been struggling lately would be an understatement.

U.S. stocks have taken a shellacking since Wednesday, and it can be tough to find historical precedents that neatly line up with the latest market action.

Already, the magnitude of the drop over the past three trading days has drawn comparisons to the 1987 crash and the fallout that followed the failure of Lehman Brothers in September 2008, according to Bespoke Investment Group.

Of course, no two selloffs are exactly alike. But there are many aspects that make the latest stretch of stock-market volatility particularly unusual compared with earlier episodes, several professional investors told MarketWatch.

“There’s a lot at play that is uniquely relevant to the volatility that we’re seeing right now,” said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners.

Here are five things that set the latest stretch of stock-market carnage apart.

Wall Street earnings estimates haven’t really changed

Analysts’ expectations for how much money major corporations are expected to earn over the coming calendar year typically have a major bearing on stock prices.

But so far this year, these forecasts have been remarkably steady, according to John Butters, senior earnings analyst at FactSet. Only one similar episode comes to mind, he said: The COVID-19 crash in 2020.

In 2020, Wall Street estimates for full-year S&P 500 earnings had fallen by about 2.8% as of March 12, while the S&P 500 had fallen by more than 20%.

Since the start of 2025, analysts have only cut their full-year profit estimates for S&P 500 firms by about 1.7%, Butters said.

Michael Kantrowitz, chief investment strategist at Piper Sandler, highlighted this discrepancy in a report shared with MarketWatch on Monday. He said it was evidence that the latest selloff was “all fear” driven.

Stocks have seen a series of dramatic declines out of the gate

On Sunday night, S&P 500 futures were down by more than 1% at the open for the fourth session in a row. In fact, futures briefly fell by more than 5% before starting to trim their losses.

In the 42 years since the inception of the futures market, this has only happened once before, according to SentimenTrader’s Jason Goepfert: On Sept. 16, 2008, the morning after Lehman Brothers failed.

Goepfert also analyzed 15 previous selloffs that displayed a similar pattern to the weakness seen over the past month in stocks. He found few examples where the market saw a decline of this magnitude.

U.S. dollar has weakened alongside the S&P 500

Recently, when U.S. stocks have stumbled, the U.S. dollar has reflexively strengthened. At least, that has generally been the case since the 2008 financial crisis.

But beginning in February, the S&P 500 and the greenback have seen their weakness overlap. As stocks sank further following President Donald Trump’s Wednesday tariff unveiling, the dollar tumbled, too.

Steve Englander, head of global G-10 foreign-exchange research and North America macroeconomic strategy at Standard Chartered, spotted a similar pattern that played out as stocks sank following the peak of the dot-com bubble in 2000.

The dollar functioned as a safe haven during the 2008 crisis, and again during the COVID-19 pandemic and the 2022 bear market. But the need for investors to flee to safety in dollars has diminished this time, Englander said.

“This time around it’s not a liquidity or credit-market issue, so the need to stock up on dollars is limited,” he said.

Rise of passive investing could be making markets more volatile

Over the past decade, investors have piled more money into passive index-tracking strategies, while moving away from actively managed funds.

Assets held by passive index-tracking strategies were roughly double those managed by active funds, according to the latest data from Morningstar Direct.

This could be contributing to the speed of the selloff, GammaRoad’s Rizzuto said, as the rise of passive investing has coincided with an increase in stock-market concentration.

“Holdings within passive strategies are much higher than they’ve ever been before,” Rizzuto told MarketWatch.

This isn’t the only major development in the asset-management space that could be fueling more volatility in markets, Rizzuto said. Increasingly, sophisticated hedge funds have embraced systematic “volatility targeting” strategies that employ quite a bit of leverage.

When these funds cut their exposure to stocks, they could be exacerbating the speed of these selloffs.

A ‘grenade in the foxhole’

Another notable detail that sets this selloff apart: The policy decisions that inspired it were almost entirely self-inflicted, said Ben McMillan, chief investment officer at IDX Advisors.

“Trump basically just tossed a grenade into the foxhole and walked away,” McMillan said. “This has been policy-driven, not market-driven.”

Across Wall Street, even many asset managers who have been vocal supporters of Trump have spoken out to urge him to move more gradually when it comes to slapping tariffs on U.S. allies. On Sunday evening, hedge-fund billionaire Bill Ackman said Trump should implement a 90-day timeout to allow for more time to negotiate deals.

So far, Trump and senior members of his administration have stuck to their guns, and the president is now threatening to impose even more tariffs on China if Beijing doesn’t back off the retaliatory tariffs it has threatened to impose on U.S. goods.

U.S. stocks were volatile once again on Monday, although the S&P 500 closed well above its lows from earlier in the day. The index finished down 0.2% to 5,062.

The Nasdaq Composite actually rose 0.1% at 15,603. Meanwhile, the Dow Jones Industrial Average was off by 349 points, or 0.9%, at 37,965.