The Nasdaq-100 index has experienced an 11.3% decline from June 2 to July 29, marking a shallow correction. CFRA Research indicates that if this is the bottom, the index could recover its losses in about two months and rise an additional 6% in the following month.
However, if the index continues to decline and enters a bear market, defined as a drop of over 20% from its peak, recovery could take 43 days, followed by a potential 11% increase over the next two months. Sam Stovall, chief investment strategist at CFRA, likens the current investor sentiment to a runner facing hurdles, emphasizing the uncertainty ahead.
Despite strong earnings reports exceeding analysts' expectations, nine out of eleven S&P 500 sectors have seen downward revisions in their 2027 growth estimates, with the overall growth forecast for the S&P 500 reduced from 18.0% to 13.6%. Additionally, August is historically a challenging month for the S&P 500, known for its high volatility.
On a positive note, stocks showed signs of recovery on Monday, with the Nasdaq-100 rising 1.8% as investors shifted focus towards megacap stocks and software, moving away from semiconductors