The recent pullback in the stock market has many worried about further pullbacks. Lingering inflation concerns, rising Treasury yields and changes in the outlook for the Federal Reserve’s interest rate policy have prompted a market correction, with the S&P 500 down nearly 4% from its 52-week high as of Tuesday. Last week, the stock index suffered its worst weekly performance since October 2023. Chief investment strategist Sam Stovall said that since World War II, there have been 24 corrections, with an average decline of 13.9% and a duration of about 4 months. It took the S&P 500 Index 4 months to recover. Total loss in decline. A retracement is defined as a closing decline of 10% from one of the major U.S. stock indexes (usually the S&P 500 or the Dow Jones Industrial Average) from its recent 52-week high. If the decline reaches 20% or more, it is considered a bear market. Data from CFRA shows that dating back to 1990, the market fell an average of 14.7% in corrections, and it took just three months to recoup the losses in corrections. “History reminds us again that for long-term investors, it’s often better to buy than to bail,” Stovall said. .SPX 1Y Is there more to come for the Mountain S&P 500? From a technical perspective, the S&P 500 is currently trading around 5,060 and is currently firmly below its 50-day moving average, suggesting that there may be trouble ahead, said Jonathan Krinsky, chief market technician at BTIG. to more trouble. “There may be more to come from this correction,” Krinsky said in a note. “While we could see a short-term relief rally at any time, downside risks remain as long as the SPX trades below 5,114.” In addition In addition to the risk of inflation accelerating again, the market is also facing unprecedented turmoil in the Middle East. Heightened geopolitical risks have led British investment bank Liberum Capital to call for oil prices to soar to $100 and stock market corrections to reach 10%. Marko Kolanovic, chief market strategist and co-head of global research at JPMorgan Chase, also warned of a larger pullback in the future. “For a market that relies on perfect deflation, a dovish Fed reaction function, and diminishing growth tail risks, continued strong growth and inflation data could take us to a tipping point where the equity relative to bond risk premium closes. Tightening will eventually lead to a market correction,” he said in a note.
