With U.S. equities on the rebound, this summer’s selloff is looking more like a pause in the bull market than the beginning of its end.
Of course, traders have struggled to forecast where the economy is headed — and the recession fears that helped drive the recent pullback could resurface again just as quickly as they faded. On top of that, the U.S. elections and geopolitical tensions are adding other elements of uncertainty.
But beneath the surface, there’s some reassuring signals. Among them: The selloff hit a relatively small slice of the market, with nowhere near the breadth of the routs set off by the Federal Reserve’s rate hikes, the pandemic and other pivotal events. And while valuations are at risk of another recalibration if the economy does wind up sputtering, the S&P 500 Index during the recent retreat held above a threshold that — to technical analysts, at least — telegraphs investors’ continued confidence.
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