US stocks kicked off August with a sharp retreat as the Trump administration announced reciprocal tariffs on several countries – with levies ranging from 10% to 41%.
A disappointing monthly jobs data (July) revealing ongoing labour market weakness added further to investor woes, triggering a notable decline of as much as 2.0% in the benchmark S&P 500 index.
While these headlines rattled financial markets on Friday, the broader picture remains sufficiently positive for investors to not be overly concerned.
In fact, there’re compelling reasons to view this pullback as a healthy pause, perhaps even a buying opportunity for the second half of 2025.
S&P 500 was due for consolidation
Ahead of Friday’s sell-off, the benchmark S&P 500 index was up nearly 27% versus its April low, marking one of its most aggressive rallies in recent history.
Following such rapid gains, a short-term cooldown is not only expected – it’s actually constructive.
Technical analysts note the index had been riding a wave of bullish momentum since spring, and needed time to stabilize before resuming its upward trajectory.
Frank Cappelleri of CappThesis, for example, described the recent surge as “digestive,” suggesting all the benchmark index did on Friday was recalibrate to unlock its “next leg higher”.
Simply put, the aforementioned pullback in the US stocks may have been less about weakness and more about sustainability.
August tends to be weak for the S&P 500 index
Historically, both August and September tend to be sluggish for US stocks. The seasonal weakness is well-documented and reflects investor caution ahead of fall earnings and macro developments.
According to Andrew Thrasher, the founder of Thrasher Analytics, the market had seen very few large daily swings in recent weeks, which can set the stage for volatility when a 1.0% move finally hits.
In a recent note to clients, Ari Wald of Oppenheimer added that internal market breadth had narrowed at the recent peak, with fewer stocks participating in the rally. The setup, combined with seasonal headwinds, makes it unsurprising that the benchmark S&P 500 index experienced a modest retreat on Friday.
Investors familiar with these patterns know that softness in late summer doesn’t necessarily derail the broader bull case.
Oppenheimer sees S&P 500 soaring to 7,100 level
Despite recent turbulence, Oppenheimer remains bullish on S&P 500’s long-term trajectory.
The investment firm currently has a street-high year-end target of 7,100 on the benchmark index, implying potential upside of another 14% from current levels.
Ari Wald, the head of technical analysis, acknowledged short-term vulnerabilities in small-cap and value stocks in his latest research note but emphasized the strength of large-cap growth names.
He expects seasonal consolidation to continue through the third quarter but views it as a setup for renewed gains.
For investors with a long-term horizon, this reinforces the idea that Friday’s sell-off is more of a pit stop than a detour.
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