After months of climbing to record highs, the U.S. stock market finally hit a small bump — but according to most analysts, this looks more like a short pause than the start of a serious downturn.
The S&P 500 slipped about 2.4% over the last eight trading days, as investors grew cautious about the high valuations in tech and AI-driven companies that have been powering this year’s rally. Still, many experts believe the pullback is just a “speed bump,” not a crash.
Raheel Siddiqui from Neuberger Berman compared the situation to hitting a small bump on the road rather than “crashing into a wall.” He and others argue that the market isn’t showing signs of a recession or a bear market.
Despite some profit-taking and nervousness, the bullish sentiment remains strong thanks to several key factors — a more flexible Federal Reserve, increased business spending on artificial intelligence, and a relatively healthy economy.
Chris Dyer from Eaton Vance Equity noted that investor positioning and sentiment haven’t really changed, suggesting that confidence in the market’s long-term strength remains intact.
Market watchers also pointed out that recent volatility is perfectly normal. The S&P 500 hasn’t seen a drop larger than 3% since April, and as Mike Reynolds of Glenmede Wealth Management said, “This is just a reminder that volatility exists and is normal.”
While the Nasdaq saw its biggest weekly decline in seven months, the Dow and S&P 500 still managed to end the week slightly higher — a sign that the broader market isn’t panicking.
Some traders admit we’re seeing a bit of “fear of heights,” as Tobias Hekster from True Partner Capital put it, but there’s no major sell-off in sight. In fact, others warn against overreacting — David Wagner from Aptus Capital Advisors said that pulling money out now could be “one of the biggest mistakes” investors make.
The overall mood is that the market remains on solid ground. Economic growth is holding up, helped by strong consumer spending and booming business investment, according to data from the National Association for Business Economics.
Even so, analysts caution that with the S&P 500 already up 14% and the Nasdaq nearly 19% this year, another round of selling could easily occur if economic news turns sour — especially since the ongoing U.S. government shutdown has disrupted the flow of official data.
As veteran strategist Sam Stovall from CFRA put it:
“Bull markets don’t die of old age — they die of fright. And what investors fear most right now is a recession.”
Overall, Wall Street seems to agree: this isn’t the end of the rally — it’s just a breather.
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