U.S. equity markets closed sharply lower on Thursday, February 12, 2026, as a dramatic spike in volatility triggered a broad-based sell-off across risk assets. Investors moved decisively into defensive positioning, driving losses across large caps, small caps, and technology shares. The sharp increase in the volatility index underscored heightened uncertainty and reinforced a cautious tone heading into the end of the week.

Volatility Explodes as Risk Appetite Reverses

The most striking development of the session was the surge in volatility. The VIX jumped more than 18 percent, marking one of the largest single-day increases in recent weeks. Such a sharp rise typically reflects an aggressive shift toward downside protection and signals rising investor anxiety.

When volatility climbs this quickly, markets often experience synchronized selling across sectors rather than selective rotation. Higher volatility raises risk premiums and can amplify intraday swings, making investors more defensive. Thursday’s spike suggests that market participants are reassessing short-term risk following recent instability.

Technology and Small Caps Lead the Sell-Off

Growth-oriented stocks bore the brunt of the decline. The Nasdaq dropped more than 2 percent, reflecting heavy selling in technology shares. Technology stocks are particularly sensitive to volatility and changes in financial conditions, and today’s move highlights renewed pressure on high-valuation segments.

The Russell 2000 also fell sharply, declining just over 2 percent. Small-cap stocks tend to react strongly to shifts in investor confidence and credit conditions. Their underperformance signals tightening risk tolerance and caution toward economically sensitive companies.

The S&P 500 slid more than 1.5 percent, with losses spread across multiple sectors. While defensive stocks offered limited support, selling pressure remained broad, indicating a widespread move away from equities rather than a targeted sector correction.

Dow Declines as Blue Chips Fail to Provide Shelter

The Dow 30 fell more than 1 percent, reflecting weakness even among large-cap, established companies. Blue-chip stocks often provide relative stability during volatile sessions, but today’s decline suggests that selling pressure extended beyond growth sectors.

Industrial and financial stocks weakened alongside technology, reinforcing the depth of the risk-off shift. The Dow’s decline signals that investor caution is not limited to speculative segments but has broadened across the market.

Canada and Brazil Join the Downturn

Equity markets across the Americas mirrored U.S. weakness. The S&P/TSX Composite Index in Canada fell more than 2 percent, marking one of the steepest declines in the region. Weakness in financials, energy, and materials weighed heavily on the index as global growth concerns intensified.

Brazil’s IBOVESPA declined 1 percent, reflecting emerging market sensitivity to rising volatility and currency dynamics. While losses were less severe than in North America, Brazil’s decline underscores the global nature of today’s risk-off environment.

Dollar Firms Slightly Amid Market Turbulence

The U.S. dollar strengthened modestly during the session. Even small gains in the dollar can tighten global financial conditions and weigh on multinational earnings and emerging markets. Combined with the volatility spike, the firmer dollar reinforced defensive positioning.

Currency markets will remain a key indicator of global liquidity conditions, especially if volatility persists in the coming sessions.

Looking ahead, investors will focus on whether volatility stabilizes or continues to rise. Key risks include further downside momentum in technology and small-cap stocks, tightening financial conditions, and potential spillover into credit markets. While sharp rebounds can occur after intense sell-offs, sustained recovery will likely depend on declining volatility and renewed confidence in economic stability.