Stocks Soared This Quarter — But Even Optimists Fear a Drop Ahead
The S&P 500 jumped 14% and chip stocks exploded, but Wall Street experts warn a pullback of up to 20% could be coming.
After a rocky start to 2026, the U.S. stock market just enjoyed one of its best stretches in years. But even the most optimistic experts are now warning that a drop could be just around the corner.
A record-breaking quarter for stocks
The second quarter of 2026 (April through June) was a huge winner for investors, especially anyone who owned chip companies.
- The S&P 500 (an index, or basket, tracking 500 of America's biggest companies) rose 14% — its best quarter since June 2020.
- The Nasdaq (an index packed with technology stocks) is on track for nearly a 20% gain.
- The semiconductor index (which tracks companies that make computer chips) soared more than 80% — its best quarter ever.
- Korean chip giant SK Hynix jumped a stunning 225.7%.
Why the gains happened
Normally, analysts lower their profit predictions as a quarter ends. This time they *raised* them. Companies in the S&P 500 are expected to grow their earnings (profits) by 23.1% — the second straight quarter above 20%. Strong profits help justify the higher stock prices.
Why experts are nervous
Despite the good news, several warning signs are flashing:
- Excessive leverage (investors borrowing lots of money to buy stocks) is propping up the market — risky if prices fall.
- Uncertainty about the Fed (the U.S. central bank that sets interest rates).
- One expert, David Laut, warns of a possible 10%–20% correction (a market drop). A "correction" simply means a meaningful fall in prices.
- Even bullish (optimistic) strategists at RBC told clients to expect drops of 5%–10% over the next year.
The market has been on a tear, but the road ahead may not be smooth. Future gains now depend heavily on companies continuing to deliver strong profits — and experts say investors should brace for a bumpy ride.
This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/even-wall-street-bulls-are-worried-about-a-stock-market-pullback-after-dazzling-second-quarter-d4799f26?mod=mw_rss_topstories