Raymond James Says S&P 500 Enters Correction Phase—Further 8–10% Decline Possible

(New York=Yonhap Infomax) Jeong Ho Jin—Raymond James has warned that the recent surge in volatility in the U.S. stock market signals the S&P 500 has entered a correction phase, with the potential for an additional 8–10% decline in the coming months.

In an investment note released on the 25th (local time), Javed Mirza, Director of Quantitative and Technical Strategy at Raymond James, stated, “The S&P 500 index could fall another 8–10% over the next three months,” adding, “Several warning signals emerged last week indicating this risk.”

Mirza pointed out that a series of “mechanical sell-offs” in the S&P 500, Nasdaq 100, and Dow Jones Industrial Average last week were among these warning signs. He explained, “These sell signals followed similar moves in the Russell 2000 index the previous week, highlighting underlying market fragility.”

He further noted that the persistent weakness in market breadth and internal indicators is concerning, historically suggesting a negative medium-term outlook.

“Volatility is currently triggering ‘mechanical buy’ signals in both the short and medium term,” Mirza said. “Portfolio managers are shifting toward consumer staples and value stocks to mitigate risk.”

He added, “These factors indicate that portfolio managers should begin managing risk controls. For now, any counter-trend rebound is unlikely to last and will likely stall at the key resistance of the 50-day moving average.”

However, Mirza also noted that the correction could present investors with opportunities to increase positions in technology, industrials, and basic materials.

jhjin@yna.co.kr

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