Goldman’s Flood Sees ‘Extreme’ Focus on Hedging Driving Selloff

A dramatic reversal in US stocks Thursday underscored how Nvidia Corp.’s blowout earnings failed to deliver the “all clear” for risk that traders sought, instead sending them for cover against further losses, Goldman Sachs Group Inc. partner John Flood said.

An early surge in US stocks at the open evaporated quickly. The S&P 500 Index climbed as much as 1.9% in the first hour before flipping to a 1.1% loss by 1 p.m. — the biggest intraday swing since April’s market turmoil — wiping out more than $2 trillion in value from the day’s peak and closing below its 100-day moving average for the first time in months. The VIX jumped above 26.