Market analyst Benjamin Cowen said the fourth‑quarter (Q4) selloff in U.S. stocks occurred on schedule, despite arguments that broad expectations would prevent a correction.
Historical cycles and recent performance
Cowen based his outlook on three mid‑term cycles, acknowledging that the approach is not an exact science. He noted that the Nasdaq has fallen more than 10%, a decline comparable to the 2018 correction. The Russell index has dropped between 11% and 12%, the Dow Jones Industrial Average about 7%, and the S&P 500 roughly 4%.
Past corrections
Cowen referenced a 23% decline in stocks late in 2018 and a similar 23% drop that began in the third quarter of 2022. He also mentioned that Bitcoin historically tends to bottom in Q4, drawing a parallel to the equity market pattern.
Recent market events
He pointed to Alphabet’s post‑earnings slide, with the parent company closing 12.6% lower on October 29, as evidence that the correction is underway. The Nasdaq fell 2.86% on a recent Friday, and analysts have highlighted mid‑term and AI‑related risks.
Outlook
Cowen expects a low in the next couple of months followed by a bounce, and he anticipates the OpenAI IPO, possibly in early 2027, as the next major market narrative. He also mentioned that geopolitical tensions and upcoming mid‑term elections add volatility, and he expects the S&P 500 to be among the last indexes to fall before a policy response.
Other perspectives
Morgan Stanley strategist Mike Wilson described any dip as a buying opportunity, suggesting a decline toward 7,100 on the S&P 500 could precede a rally to 8,000.
