Markets take the stairs up and elevator down. After months of relentless rallying, stocks finally started to pullback on renewed tariff threats. The herd swings manically both ways: these traders either believe that the rally can’t end, or that the first pullback is the sign of a “1987 Black Monday crash”.
As is often the case, the data calls for less extreme scenarios. It is not common for the S&P 500 to make a new all-time high, then immediately meltdown the next day (as it did on Friday). These are typically news-driven events that can lead to more short term volatility, but longer term is followed by more gains.
