The bull case: why this could be a healthy pullback
Start with the numbers, which are less alarming than the headlines might suggest: the S&P 500 sits only about 2.4% below its 52-week high of 7844.52, and it is still up 1.43% over one month and 1.67% over three. If this is a crash, it’s a remarkably polite one.
The VIX seems to agree, having risen 0.95 points to 16.22, which leaves it some way short of the 20-plus readings that usually accompany genuine fear. Nor have the dip buyers gone anywhere, given that Japan’s Nikkei snapped a six-session losing streak and the KOSPI clawed back 2.05% almost as soon as the dust had settled.
Europe, meanwhile, barely seemed to notice, with the STOXX 600 rising 0.7% on Friday to a three-week high and logging its best week since late June, helped along by solid earnings from companies that have never claimed to be AI plays in the first place. Financials, energy, industrials and defence don’t need a chatbot to make money, and the fact that US 10-year Treasury yields posted their largest weekly decline in more than a year has removed at least one source of pressure for the time being.