After weeks of record highs, the S&P 500 has slipped 2.4% over the past eight sessions, sparking debate on whether the rally is running out of fuel.
Most investors, however, see the move as a “speed bump,” not a derailment.
“It’s a speed bump, not a wall,” said Raheel Siddiqui of Neuberger Berman.
“We don’t have the preconditions for a deeper correction or recession.”
🔹 Key Drivers Behind the Dip
- Profit-taking after strong YTD gains (S&P +14%, Nasdaq +19%)
- Valuation anxiety in AI and tech — the sectors leading the rally
- Data uncertainty following the U.S. government shutdown
- “Fear of heights” among short-term traders, not structural weakness
Still, fundamentals remain firm:
💼 Corporate earnings are resilient
🏦 The Fed continues easing financial conditions
⚙️ Capex in AI and automation keeps rising
🔹 The Market’s Mood
Institutional sentiment remains broadly constructive:
- Eaton Vance’s Chris Dyer: “No significant change in positioning or sentiment.”
- Glenmede’s Mike Reynolds: “Volatility exists — and it’s normal.”
- Federated Hermes’ Phil Orlando: “Any near-term chop is a buying opportunity.”
Even cautious managers warn that the bigger risk is overreaction.
“The biggest mistake investors could make right now is taking money off the table too early,” said David Wagner of Aptus Capital.
🔹 Longer-Term Outlook
The macro backdrop still supports risk assets:
📊 U.S. GDP growth remains stronger than expected
📈 Business investment is offsetting weaker consumption
🌍 Emerging markets show “healthy” expansion momentum
As CFRA’s Sam Stovall put it:
“Bull markets don’t die of old age — they die of fright. Right now, the fear is of a recession, not reality.”