I don't know if "The Sky Is Falling" technically is an idiom or merely a literary reference. None the less, it is commonly used to describe an extreme overreaction to an event.
The general story a young bird named Chicken Little feels an acorn drop on the top of his head. He becomes convinced that the world is coming to an end because the sky is falling. He does his best to warn everyone around him by running around yelling, "The sky is falling! The sky is falling!" Alas, it was only an acorn.