Key Takeaways

• The current rout may not spell the end of the bull market—though the jobs market is slowing down.
• On the plus side, the S&P 500 index remains in an undeniable uptrend, with the majority of stocks above their 200-day moving average.
• The earnings picture continues to improve, notwithstanding a few visible misses this week. Q2 earnings growth is now up to 12%.
• Remember, the odds of a 5% correction are 64%. The market has gone up 60%–70% of the time by an average of 10% per year,1 but that return comes at a price, in the name of volatility.
• Stay diversified, and this too shall pass.

The one-two punch of a weak Purchasing Manager’s Index (PMI) on Thursday and a weaker-than-expected jobs report on Friday took the market into a tailspin that has now pushed the S&P 500 index 6.5% below its recent all-time high as of August 2.

The CBOE Market Volatility Index (VIX) has gone from dormant to quasi-panic levels in a matter of days, driven not by fears of higher rates (as was the cause during previous wobbles), but fears of recession on top of the churn driven by the market’s internal rotation. Seems overdone to me.

Here are 8 things to know about this week’s market action.

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