The stock market may be in the middle of a reset, but according to one of Wall Street’s most closely watched voices, the worst may not be over. A chief investment strategist at Bank of America has laid out a framework suggesting that the conditions typically needed to signal the end of a brutal correction are only partially in place, leaving investors with little reason to expect a sharp recovery in the near term.
The argument centers on a familiar pattern in market history. When extreme optimism builds up across financial markets and an unexpected external shock arrives, such as the escalating Iran conflict, the result is a broad reset in valuations and sentiment. That is precisely the environment investors find themselves navigating right now.
Over the past week, the major indexes reflected the pressure. The S&P 500 fell roughly 2%, the Dow Jones Industrial Average dropped about 3%, and the Nasdaq Composite slid approximately 1.2%. The S&P 500 closed at 6,740.02 on March 6, 2026, putting it down about 1.5% for the year to date.
The reset already underway
The strategist outlined two conditions that tend to mark the turning point in a market correction. The first involves the most beaten-down areas of the market finding a floor. That process appears to already be unfolding across segments of the technology sector, large-cap growth stocks, private credit, and even digital assets like bitcoin, all of which absorbed significant losses in the months leading up to the current turbulence.
The second condition involves assets that became overcrowded during the preceding rally beginning to pull back as investors unwind stretched positions. That dynamic is also now playing out. Gold, semiconductor stocks, emerging market equities, European stocks and banking shares have all come under selling pressure in recent weeks as portfolios are rebalanced.
A handful of key market trackers reflect that unwinding. A major gold ETF fell roughly 2.1% between late February and early March. A semiconductor-focused fund dropped about 6.4% over the same stretch. An emerging markets ETF slid approximately 8.4%, while a Europe-focused fund declined around 6.3% and a banking sector fund lost about 2.5%.
The missing piece
Despite both of those conditions taking shape, the strategist argues that a third and final signal has yet to arrive. Historically, market corrections of this type tend to resolve only after safe-haven assets like oil and the U.S. dollar begin to weaken. That has not happened. Both remain elevated, reflecting the ongoing uncertainty surrounding the conflict and its impact on global supply chains and energy markets.
Until that final piece falls into place, the view from Bank of America is that investors should not count on meaningful upside in the near term. The underlying mechanics of a recovery may be assembling quietly beneath the surface, but the all-clear signal has not arrived.
Putting it in perspective
For context, the S&P 500 has closed higher in four of the past five calendar years, with gains ranging from roughly 16% to nearly 27% annually between 2020 and 2025. Last year’s close of 6,845.50 represented a gain of about 16.4%. The index now sits modestly below that level as it absorbs the twin pressures of geopolitical uncertainty and a rapidly shifting energy landscape.
The broader takeaway for investors is one of patience. The market may not be broken, but it is not finished resetting either. And if history is any guide, the final stage of a correction rarely announces itself in advance.
