‘Overdue’ pullback in U.S. stocks to test dip-buyers’ resolve

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First share decline in six months is leaving investors in a difficult position

The first sharp pullback for U.S. stocks in half a year is leaving investors wondering whether to buy the dip or hold out for more declines.

For the last week, however, sellers have had the upper hand. The S&P 500 fell for its sixth straight session on Friday, the longest such streak since October 2022. Lip has started adding equity exposure for clients and plans to buy more if stocks slide further. Nevertheless, he believes the S&P 500 could fall by as much as 10% from its March 28 high.

“We’re not surprised that there was a bit of a pullback,” said Sonu Varghese, global macro strategist at Carson Group, who has been using the recent weakness as an opportunity to increase positions in small-cap stocks.Still, investors have grown cautious. Clients of BofA sold $800 million in U.S. equities in the latest week, the third straight week they were net sellers, the firm said last Tuesday.

“With the current situation in the Middle East potentially escalating, I am surprised short term volatility isn’t higher,” said Seth Hickle, managing partner at Mindset Wealth Management. So far, the earnings picture has been mixed. Netflix shares fell on Friday as its plan to stop sharing subscriber numbers from 2025 stoked growth worries, while Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, dialed back expectations for chip sector growth.

 

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