Trader sentiment on the S&P 500 reaching a new all-time high has turned cautious amid escalating Middle East tensions, particularly involving Iran, sparking a risk-off selloff that dropped the index 1.67% in the latest session to around 6,369—roughly 9% below its January 28, 2026 peak of 7,002. This pullback extends a March decline from mid-month highs near 6,800, driven by heightened geopolitical uncertainty overshadowing resilient U.S. economic data like steady labor markets and cooling inflation trends. Polymarket traders, wagering real capital, reflect this via market-implied odds pricing in elevated volatility, with the VIX spiking amid fears of oil supply disruptions. Key catalysts ahead include next week's March 30-April 3 economic releases—ISM manufacturing, nonfarm payrolls—and early Q1 earnings from megacaps, alongside the April FOMC meeting where rate cut expectations remain at two for 2026 per Fed funds futures. Historical base rates show the index rebounding from similar 9% drawdowns 80% of the time within three months, but sustained conflict could prolong the correction.