US stocks trade mixed as Powell says economy is making progress

Jerome Powell
Jerome Powell

  • US stocks closed mixed on Wednesday after Fed Chairman Jerome Powell said the economy is making progress towards it tapering standards.
  • Despite the economic progress, Powell said the Fed is not yet ready to begin tapering its monthly bond purchases.
  • Investors were also digesting earnings results from mega-cap tech companies like Apple, Alphabet, and Microsoft.
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US stocks were mixed on Wednesday, with the S&P 500 and Nasdaq 100 rising following comments from Federal Reserve Chairman Jerome Powell.

Powell said the economy is beginning to make progress towards it standards that would trigger the Fed to begin tapering its monthly bond purchases, but that the economy is not yet fully there. The Fed will continue its monthly bond purchases of $120 billion.

Investors were also digesting strong earnings results from mega-cap tech companies like Apple, Alphabet, and Microsoft.

All three tech giants easily surpassed analyst’s revenue and EPS estimates, helping boost shares of Microsoft and Alphabet in trades on Wednesday. Apple traded slightly lower as investors questioned if Apple’s strong growth rates were sustainable.

Here’s where US indexes stood after the 4:00 p.m. ET close on Wednesday:

The strong moves in US tech companies are in stark comparison to Chinese tech stocks, which continue to sell off as increased regulation from Beijing spreads to various industries. Cathie Wood’s Ark Invest continued to sell off their stakes in Chinese tech companies on Tuesday.

Robinhood’s expected IPO later this week will not be bought by some large asset managers, as they are reportedly going to sit out the offering in fear of retail-driven volatility. The retail brokerage app is now testing a new feature that will let users invest their spare change into select stocks.

Crypto-exchange Binance said it will step up its compliance efforts, including data-sharing with regulators and implementing a tax-tracking tool. The company has come under fire from a number of jurisdictions for its lack of compliance safeguards.

Crypto bull Mike Novogratz criticized Senator Elizabeth Warren’s anti-crypto stance on Tuesday, saying that DeFi is far more transparent than banks. Warren had sent a letter to Treasury Secretary Janet Yellen calling for tougher rules on cryptocurrencies.

Oil prices were higher. West Texas Intermediate crude was up as much as 0.66%, to $72.12 per barrel. Brent crude, oil’s international benchmark, jumped as much as 0.54%, to $74.88 per barrel.

Gold was up 0.34%, to $1,805.90 per ounce.

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Stocks are due for a pullback of up to 8% in the next 3 months, says LPL Financial

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Traders on the floor of the New York Stock Exchange.

  • The S&P 500 looks due to pullback by 5%-8% in upcoming months after a strong performance year-to-date.
  • LPL Financial outlined its view as the benchmark index has nearly doubled since last year’s low amid the pandemic.
  • The S&P 500 hasn’t had as much as a 5% pullback since October 2020.
  • See more stories on Insider’s business page.

The US stock market roared back swiftly from its pandemic-induced crash last year and the S&P 500 has notched a double-digit gain so far in 2021 – but its performance puts the benchmark in line for a pullback by up to 8% before the year ends, says LPL Financial.

The gauge of the largest listed companies in the US has advanced by nearly 18% this year, with record highs supported in part by expectations of robust growth in corporate earnings as companies work to regain their footing as the pandemic eases.

The S&P 500 finished 2020 up 16% by clawing out of the bear market it slid into in March 2020 as the coronavirus pandemic unfolded. The index also finished strongly in 2019, springing up by 29%.

“After more than a 90% rally off the March 2020 bear market bottom (and near double on a total return basis) we do think the odds are much higher of a standard 5-8% pullback during the historically troublesome August/September/October period,” said Ryan Detrick, chief market strategist, and Jeff Buchbinder, equity strategist, at LPL Financial, in a Monday note.

“This isn’t a bad thing though, as some type of break could be necessary before another move higher,” the strategists said in outlining what they consider six surprises in markets so far this year.

The S&P 500 through Tuesday’s session had risen by 98% since its crash and bottom on March 23, 2020. Its climb started after the index slid 34% from its peak set in mid-February 2020, with investors rattled by the prospect of an economic recession from the COVID-19 outbreak. The index staged a fast recovery in reaching an all-time high in August 2020.

“Historically, year two of a bull market can be choppy and quite frustrating. After the huge gains we saw the last nine months of 2020, we entered 2021 expecting there to be more give and take than we’ve seen this year,” said the strategists. “In fact, the S&P 500 hasn’t even had as much as a 5% pullback since October 2020, one of the longest streaks ever. That is very surprising indeed.”

The S&P 500 has been fueled by anticipation of improved earnings. Ahead of this week’s busy docket for financial results, S&P 500 companies were on track for their best profit growth since 2009, with Refinitiv estimating a rise of 78.1% year-on-year in the second quarter.

The strategists also said they’ve been surprised by the lack of volatility so far in 2021. The stock market’s fear gauge, the Cboe VIX Volatility index, has dropped by 22%, hovering around 17.

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US stocks log record highs as investors look to Big Tech to sustain earnings growth

NYSE Traders
  • Dow industrials push further beyond 35,000 in Monday’s record-setting highs for stocks.
  • Tesla and Facebook earnings are among those on deck for this week’s earnings wave.
  • The Federal Reserve will start its two-day meeting on Tuesday.
  • See more stories on Insider’s business page.

Stocks finished at record highs Monday as investors set their sights on earnings reports from major technology companies and appeared to set aside concerns about economic recovery in the face of rising coronavirus cases.

The Dow Jones Industrial Average pushed further above 35,000 after crossing that threshold for the first time on Friday. Stocks overcame losses earlier in Monday’s session to build on record highs notched Friday, capping a rebound from a rout last week. Stocks have seen points of weakness in recent sessions on worries about increasing COVID-19 cases around the world as the highly transmissible Delta variant spreads.

Investors will start to plow through this week’s earnings reports, with more than one-third of S&P 500 companies set to release results. Tesla’s report is due after the bell Monday, followed by Alphabet, Apple, Microsoft on Tuesday, and Facebook on Wednesday.

Here’s where US indexes stood at 4:00 p.m. on Monday:

S&P 500 companies are on track for their best earnings growth since 2009, with profit expected to increase 78.1% year-on-year in the second quarter.

“What we’re looking for is what are companies doing with these strong earnings, what are they doing with their cash flow,” Tom Hainlin, national investment strategist at U.S. Bank Wealth Management, told Insider on Monday.

“If they’re optimistic about the future, we’re looking for them to invest that cash flow … new businesses, new initiatives, new factories,” he said. “We’re looking for what are companies doing with these proceeds to give us some insight from the corporate side into where we think the economy is going in the second half and into 2022,” he said.

The Fed’s two-day meeting that begins Tuesday and ends on Wednesday will likely produce commentary about its outlook on domestic and global economic recovery and investors will gauge when the Fed may begin tapering asset purchases or start raising interest rates.

Around the markets, billionaire investor Jeremy Grantham’s firm GMO says stocks are overvalued by every metric.

Warren Buffett’s Berkshire Hathaway is facing a legal battle with Volkswagen after rejecting a settlement deal with the German auto giant related to its emissions scandal.

Gold fell 1.3%, to $1,798.06 per ounce. Long-dated US Treasury yields slipped, with the 10-year yield at 1.27%.

Oil prices turned slightly higher. West Texas Intermediate crude was fractionally higher at $72.09 per barrel.

Bitcoin jumped 13%, to $38,955.23. The digital currency rose above $38,000 for the first time in about six weeks, partially on a report that Amazon is considering accepting bitcoin payments.

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The S&P 500 is on track for the best quarterly earnings growth since 2009 as companies smash expectations

Wall Street New York Stock Exchange
Company earnings have consistently beaten Wall Street estimates in the second quarter.

S&P 500 companies are on track for the best earnings growth since 2009, with companies smashing estimates as the US economy bounces back to life from COVID-19 lockdowns.

The strong quarter is helping support stocks despite high equity prices, rising inflation, and the threat of the delta coronavirus variant.

Earnings for S&P 500 companies are expected to grow 78.1% year-on-year in the second quarter, according to figures from financial data company Refinitiv, released Friday. That would be the best quarterly performance since the final three months of 2009, during the initial rebound from the financial crisis.

Around a quarter of the 500 companies that make up the benchmark US stock index have reported. Those in the industrial, consumer discretionary, and financial sectors are set to do the best as they profit from the reopening of the economy and favorable comparisons to last year’s weak second-quarter earnings.

So far, 88% of S&P 500 companies have beaten earnings per share estimates for the second quarter, according to data provider FactSet.

The strong results put the S&P 500 on track to be the best quarter for beats since FactSet started tracking the data in 2008. The current record was registered in the first quarter of 2021, when 86% of companies beat estimates.

Read more: GOLDMAN SACHS: 33 stocks to buy right now for strong returns of at least 15% and minimal risk as the economic reopening helps equities grind higher into year-end

And companies are raising their expectations for earnings and sales as the economic rebound continues. For example, Coca-Cola stock jumped on Wednesday when it increased its revenue and earnings outlook, citing the strong economy.

Investors have not reacted strongly to the second-quarter earnings, given that the S&P 500 has already soared more than 90% since its pandemic-induced crash in March 2020.

But the strong earnings are helping the benchmark US stock index hover at record highs.

JPMorgan analysts, led by Dubravko Lakos-Bujas, on Tuesday upgraded their year-end target for the S&P 500 from 4,400 to 4,600, which would be roughly a 5% increase from Friday’s level.

The index “should be supported by strong earnings growth and capital return until 2023,” Lakos-Bujas and colleagues said in a note.

Importantly for investors, profit margins are strong despite rising inflation and some reports of higher costs. John Butters, senior earnings analyst at FactSet, said net profit margin for the S&P 500 for the second quarter is expected to be 12.4%.

“If 12.4% is the actual net profit margin for the quarter, it will mark the second-highest net profit margin for the index since FactSet began tracking this metric in 2008, trailing only last quarter’s net profit margin of 12.8%,” he said.

Yet, there are risks ahead, not least the fact that the coronavirus pandemic is far from over. Delta variant cases have soared in Britain, and survey data suggests the numbers are slowing the country’s economic recovery.

Cases are now on the rise again in the US, contributing in part to a sharp sell-off on Monday, which saw the S&P 500 drop 1.6% and the Dow Jones fall 2.1%.

However, many investors are hoping high vaccination rates can keep advanced economies ticking over. Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note: “We see reasons to look beyond the delta variant headlines and stay risk-on, with a tilt toward reflation and reopening beneficiaries.”

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US stocks close at record highs as investors cheer blockbuster earnings

trader, NYSE

US stocks finished the week strong with all three major indexes closing at records Friday as investors cheered blockbuster tech earnings and looked towards next week’s Fed meeting.

Shares of Snap soared 23% after the social media app exceeded earnings expectations. Twitter also gained after beating estimates, and Bank of America analysts said the stock could rise another 30% as the social media platform stands to see further growth in advertising sales which have been recovering after the onset of the coronavirus pandemic. The good news lifted tech peers Facebook and Google both by more than 3%.

Here’s where US indexes stood at the 4:oo p.m. ET close on Friday:

The blank-check company backed by billionaire Thomas Barrack withdrew its application for an initial public offering Friday, just days after the 74-year-old was arrested and charged with seven felony counts involving lobbying the Trump administration on behalf of the UAE.

Stocks in Asia were mostly lower earlier Friday over concerns of tighter regulation. Regulators in China are said to be considering severe sanctions on Didi Global following its US IPO. The ride-hail giant has fallen a stunning 52% since going public.

Also, a Bloomberg report that China is considering turning tutoring companies into non-profitspushed Chinese education stocks lower Friday morning.

The 10-year US Treasury yield climbed 1.8 basis points to 1.285% after hitting a five month low at the start of the week.

Bitcoin hovered just above $32,000.

West Texas Intermediate crude gained 0.21%, to $72.06 per barrel. Brent crude, oil’s international benchmark, gained 0.39%, to $74.08 per barrel.

Gold was little changed around $1,802.30.

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Dow rises 285 points for 2nd straight daily gain as focus shifts away from growth worries to earnings season

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Stocks are on the mend following pullbacks from record highs.

  • The Dow Jones Industrial Average climbed 285 points to extend a relief rally on Wednesday.
  • The S&P 500 also rose and the Nasdaq Composite pushed through early weakness.
  • Johnson & Johnson was among the Dow stocks that raised its annual earnings guidance.
  • See more stories on Insider’s business page.

US stocks closed higher Wednesday, led by blue-chips as many corporate behemoths upgraded financial guidance, though questions linger about global economic recovery as COVID-19 infections rise.

The Nasdaq Composite overcame earlier weakness while the Dow Jones Industrial Average soared 285 points to advance for a second straight day of gains. The Dow was helped by shares of Coca-Cola, Johnson & Johnson and Verizon which rose after each company raised their financial guidance and posted quarterly results that beat analyst expectations.

Stocks extended Tuesday’s rebound from a rout in the previous session that was triggered by reports about mounting coronavirus cases worldwide. Retail investors buying the dip in shares on Monday purchased a record $2.2 billion of equities.

Wednesday’s “trade is a natural reaction to such a violent move on Friday and on Monday… but I’d steer clear of drawing any conclusions that say in today’s trading, “All is well,” Keith Buchanan, senior portfolio manager at Globalt Investments, told Insider. “We still have to see a lot more from a data perspective to reassure this market that the reopening and progress towards the new normal of economic conditions and consumer behavior are still on track.”

Here’s where US indexes stood at 4:00 p.m. on Wednesday:

Investors have been skittish about COVID-related developments, including a stall in vaccination rates in the US while the highly transmissible Delta variant of the coronavirus is responsible for an estimated 83% of all new cases, according to the Centers for Disease Control and Prevention.

Also key for the direction of markets is the outlook on inflation given that consumer and wholesales prices have shot up to multi-year highs.

“It’s paramount that investors have a clear understanding of what corporations are dealing with from a supply-shortage standpoint and how that’s developing, what they’re having to pay in order to get their products out to market,” and other cost factors including labor and whether they can pass price increases to their customers, said Buchanan.

Around the markets, Cathie Wood has added to her bitcoin exposure with another purchase of shares in the Grayscale Bitcoin Trust after the cryptocurrency fell below $30,000 on Tuesday. Meanwhile, legendary investor Jeremy Grantham said the stock and cryptocurrency markets are in bubbles worse than in 2000.

Ulta will open mini-shops at 100 Target stores next month, the biggest cosmetics retailer in the US said Wednesday.

JPMorgan Chase handed Jamie Dimon a stock award potentially worth millions if he stays CEO for at least five more years.

Gold slipped by 0.3%, to $1,804.30 per ounce. Long-dated US Treasury yields edged up, with the 10-year yield at 1.28%.

Oil prices jumped, pushing past weekly US data showing an unexpected climb of 2.1 million barrels in crude supplies. West Texas Intermediate crude rose 4.3%, to $70.31 per barrel. Brent crude, oil’s international benchmark, gained 4.2%, to $72.25 per barrel.

Bitcoin surged 6.6%, to $31,763.61.

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US stocks rise as investors weigh growth concerns against strong corporate earnings

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Traders and investors braced for the jobs data on Friday.

  • Stocks were up Wednesday following a rebound rally in the previous session.
  • Cola-Cola and Verizon aided a rise in the Dow Jones Industrial Average.
  • Bitcoin and oil prices advanced.
  • See more stories on Insider’s business page.

US stocks edged higher Wednesday, with blue-chip stocks advancing on the back of earnings reports that outstripped Wall Street’s targets, while investors confronted questions about global economic recovery as COVID-19 infections rise.

The Nasdaq Composite, home to large-cap tech stocks, slipped while the Dow Jones Industrial Average gained ground. Stocks on Tuesday staged a comeback after a rout in the previous session that was triggered by reports about mounting coronavirus cases worldwide.

Here’s where US indexes stood at 9:30 a.m. on Wednesday:

The Dow on Wednesday found strength from shares of Coca-Cola, Johnson & Johnson and Verizon after each company posted quarterly results that beat analyst expectations and raised guidance.

COVID cases have been increasing on the spread of the Delta strain of the virus and could fuel worries about stagflation, or the combination of slowing economic growth and inflation.

“If the virus begins to spread rapidly again, that would curtail economic growth and prolong the inflationary supply chain disruptions that have affected so many industries including semiconductors and housing,” said Nancy Davis, portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge Exchange-Traded Fund, or IVOL, in a note.

“Stagflation is a 60/40 portfolio’s worst nightmare, as stocks and bonds tend to fall together during stagflationary environments. Lower economic growth punishes stocks and inflation robs bond investors of their returns,” she said.

Around the markets, Cathie Wood has added to her bitcoin exposure with another purchase of shares in the Grayscale Bitcoin Trust after the cryptocurrency fell below $30,000 on Tuesday.

Ulta will open mini shops at 100 Target stores next month, the biggest cosmetics retailer in the US said Wednesday.

Gold slipped by 0.5%, to $1,801.17 per ounce. Long-dated US Treasury yields edged up, with the 10-year yield at 1.23%.

Oil prices gained ground, with West Texas Intermediate crude up 1.5% at $68.41 per barrel. Brent crude, oil’s international benchmark, gained 1.2% to $74.59 per barrel.

Bitcoin jumped 6%, to $31,586.92.

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Dow stages 550-point comeback after harsh sell-off as investors remain optimistic on growth

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US stocks staged a comeback Tuesday after a harsh sell-off the previous day, with the Dow rebounding tk points as investors bought the dip and bet on the continued strength of the economic recovery.

Industrials, real estate, and financial stocks gained the most out of any sectors in the S&P 500. Industries that hinge on the economic re-opening like restaurants, travel, and lodging all ended the day in the green.

On Monday the S&P 500 faced its steepest decline since May while the Dow Jones saw its largest daily drop for the year.

Here’s where US indexes stood at the 4:00 p.m. ET close on Tuesday:

JPMorgan’s head of US equity strategy increased his year-end S&P 500 price target to 4,600 from 4,400, representing potential upside of 8% from Monday’s close. Dubravko Lakos-Bujas remained constructive on equities, and views the latest fears of slowing economic growth “premature and overblown,” according to a Tuesday note.

Billionaire investor Bill Ackman is also bullish about the economy. He told CNBC in a recent interview that he expects a “massive” economic boom in the fall.

Robinhood, the brokerage app set to go public in the coming weeks, said it expects to pay a $30 million penalty in relation to an anti-money laundering probe of its cryptocurrency business, according to an amended S-1 filed with the SEC on Monday.

The yield on the US 10-yr Treasury jumped 3.8 basis points to 1.219%, after hitting its lowest level since February on Monday.

Bitcoin slipped to $29,828 Tuesday, over 50% lower than record highs achieved in April.

West Texas Intermediate crude climbed 1.36%, to $67.32 per barrel. Brent crude, oil’s international benchmark, jumped 1.59% to $69.71 per barrel.

Gold was flat at $1,809.

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Treasury yields fall to 5-month low as investors flee stocks for safe-haven assets

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  • Bond rallied Monday as investors fled the stock market and flocked to safe-haven assets.
  • The drop in the yield highlights a drop in risk appetite among investors as COVID-19 cases increase worldwide.
  • The 10-year yield fell to 1.181% and an intraday low of 1.176% was the lowest since February 11.
  • See more stories on Insider’s business page.

Investors fled into the bond market Monday, pulling the yield on the closely watched 10-year Treasury to its lowest since February, with investors dashing out of equities on fears that rising COVID-19 infections will threaten recovery in the world’s largest economy.

Coronavirus cases have been rising worldwide, led by the Delta variant, pushing the number of infections to nearly 191 million, according to tracking by Johns Hopkins University. Concerns about mounting cases tipped into stocks, pulling the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite from recently set record highs.

The S&P 500 lost more than 2% intraday, and all 11 of the index’s sectors fell, though defensive groups such as consumer staples and health care fared better than most.

With investors fleeing so-called risk assets like stocks, US government bonds rallied and in turn sent the rate on the 10-year yield tumbling by 12 basis points to 1.181%. An intraday print of 1.176% was the lowest rate since February 11. The 10-year yield is tied to a range of loan programs such as mortgage lending.

“The global economy is barely surviving on life support, and another wave of infections may spur lockdowns that could signal the death knell for the tenuous recovery,” and risk aversion was most pronounced in the 10-year yield, said Peter Essele, head of investment management for Commonwealth Financial Network, in a note Monday.

All 50 US states have been reporting higher caseloads and Los Angeles County, the country’s largest, has reverted back to indoor mask mandates, impacting how businesses operate. Meanwhile, the UK posted more than 50,000 new cases for the first time in six months on Friday. In the Asian financial hub of Singapore, new cases have nearly doubled to their highest amount in 11 months.

“Fear of stagflation will be a major concern for investors if a resurgence in COVID infections causes economies to slow while consumer prices continue an upward trajectory,” said Essele.

US consumer prices rose in June, propelling the inflation rate to a higher-than-expected 5.4%, with prices springing higher for used cars, food and energy.

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The stock market’s fear gauge spikes the most since February as the S&P 500 tests a crucial technical level

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A trader works during the Fed rate announcement on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019.


A 2% decline in the stock market on Monday sent Wall Street’s fear gauge soaring the most since February as investors grow concerned about the spread of COVID-19’s Delta variant.

The Volatility Index, also known as the VIX, soared as much as 34% on Monday to above the key 20 level, which is often monitored by CTA and Quant funds as to when to add or remove leverage from their portfolio and in-turn buy or sell stocks. Monday’s move in the VIX failed to outpace the fear gauge’s 46% surge on February 25.

The move higher in volatility comes as the S&P 500 tests a crucial technical support level that could determine the future direction of stock prices. The stock market’s 50-day moving average stood at 4,239, just below the S&P 500’s price of 4,242 at time of publication.

Moving averages are a lagging trend-following indicator that technical analysts use to smooth out price movements and help identify the direction of the current trend in place.

Traders view the the 50-day moving average, which is the average daily closing price of a stock over its previous 50 trading sessions, as a short-term moving average that often represents areas of support or resistance for a security.

If the stock market notches decisive and consecutive daily closes below the 50-day moving average, investors will likely look to the 200-day moving average as the next key support level. The 200-day moving average for the S&P 500 currently sits at 3,894, representing potential downside of 8% from current levels.

Conversely, if the S&P 500 is able to decisively close above its 50-day moving average, that would tee the market up to retest its record highs made last week at 4,393, suggesting potential upside of 4% from current levels.

Year-to-date, the S&P 500’s 50-day moving average has successfully acted as support five separate times amid market sell-offs.

Technical analyst Katie Stockton views the current sell-off as a “healthy pullback” that could represent a solid buying opportunity for investors.

“I would be looking for opportunities to add exposure (and, cover shorts) in the coming days assuming the signal gives way to stabilization,” Stockton told Insider on Monday.

Meanwhile, Fundstrat’s Tom Lee thinks stable bond yield spreads suggests that the stock market won’t stage a deeper sell-off, and that the rising fears of COVID-19’s Delta variant set risk assets up well for a rally in the second half of 2021.

“We don’t expect this period of chop to lead to a larger 10%-like decline for markets. Sure, a 3%-5% sell-off, even to S&P 500 4,100 is possible,” Lee said.

The S&P 500 is currently down about 4% from its record highs reached last week, and is up about 13% year-to-date.

S&P 500 stock chart
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