Market Analysis and Insights: Is the sell-off already over? History says no

The recent sell-off in the S&P 500 may not be over yet, according to market history analyzed by Sam Stovall. The decline from its July 16 all-time high totaled 4.7%, and Stovall notes that since 1990, 68% of similar declines have turned into pullbacks within a matter of weeks. A pullback is defined as a decline of 5% to 9.9%.

Meanwhile, Oppenheimer strategist John Stoltzfus believes that the market is experiencing a broadening rally, with the possibility of a shift away from megacap tech stocks. Last week, the S&P 500 and Nasdaq Composite fell, while the small-cap Russell 2000 and Dow Jones Industrial Average saw gains. Stoltzfus suggests that investors are beginning to realize the need for a wider and less concentrated approach to stock selection as the Fed considers cutting its benchmark rate.

Looking ahead, the Federal Reserve’s Federal Open Markets Committee is set to meet this week, but the market is not expecting a rate cut. Traders are predicting a 96% probability of rates remaining steady for this meeting, with expectations of a cut at the September meeting.

In the futures market, equity futures were relatively stable, with Dow futures up about 50 points at 6 p.m. in New York.

As we head into a busy week of earnings reports, investors will be closely watching how these factors play out in the market.