A bull statue and a bear statue stand outside the Frankfurt Stock Exchange on April 7, 2025 in Frankfurt, Germany.
Florian Wiegand | Getty Images News | Getty Images
Global stock markets edged higher on Tuesday, marking a tentative recovery from a bout of volatility led by an aggressive sell-off in global technology names.
Friday saw U.S. equities come under pressure, led by a sharp downward turn in chip stocks. The negative momentum bled into Asian trade, while European tech stocks also took a beating. It came after a downbeat earnings report from Broadcom sparked a rotation out of AI-linked stocks.
By Tuesday, global shares appeared to be recovering from the sell-off. U.S. stock futures were last seen trading broadly higher, with futures tied to the tech-dominated Nasdaq 100 adding 0.7%.
European tech stocks were on track for their second consecutive day of gains, with the regional Stoxx 600 Technology index clawing back a fraction of the losses incurred on Friday, while South Korea’s tech-heavy Kospi index jumped more than 8% on Tuesday following two days of losses.
‘Volatility is the price of admission’
Although many investors remain bullish on equities, there are expectations of more turbulence on the ride to greater returns.
Robert Edwards, Chief Investment Officer at Florida-based Edwards Asset Management, said in a note that the tech stock pullback was “a gift for investors.”
“We remain buyers on the dips,” he said, describing market movements as a “sawtooth pattern.”
“Sharp pullbacks have been met with aggressive buying because investors, despite the noise, know that strong fundamentals, including strong revenue and earnings growth, remain in place,” he said. “This is what bull markets in their prime look like, featuring violent moves higher and lower, which can be uncomfortable, but the overall trend is upward.”
Edwards Asset Management, which manages assets worth $3 billion, is expecting the S&P 500 to reach 7,700 points by the end of the year — representing upside of around 4% from Monday’s closing price. Edwards said that although his forecast suggested much of the market’s gains were already priced in this year, he expected further volatility to create “ample buying opportunities.”
“These buying opportunities may come from a looming 7% to 12% correction driven by uncertainty over new Fed Chair Kevin Warsh and further delays in opening the Strait of Hormuz, where oil stays elevated long enough to re-ignite inflation concerns,” he said.
Edwards also noted that while upcoming mega-cap IPOs are “adrenaline for a bull market hitting its prime,” signals for the “euphoria” that typically denotes a market ceiling were not yet present.
“We’re at the start of a frenzied buying spree worth riding,” he said. “Our message to investors is to stay invested, stay disciplined, and don’t flinch at pullbacks. Earnings are real, sidelined cash is enormous, exciting IPOs are just beginning, and macro tailwinds are more likely ahead — Hormuz reopening, falling oil, and a cutting Fed. This is where the big runs are born. Volatility is the price of admission.”
In a note on Tuesday, Anthony Willis, senior economist at Columbia Threadneedle Investments, said recent market weakness “looks more like a repricing than a fundamental break in the growth story.” However, he noted that selling pressure serves as a reminder that “strong fundamentals do not eliminate volatility.”
“Friday’s sell-off in technology, followed by weakness across parts of Asia, suggests markets are reassessing a backdrop that had looked increasingly comfortable,” he said. “The question is not whether growth has broken down, but whether markets are adjusting to a tougher mix of resilient data, higher rate expectations and persistent geopolitical risk.”
Willis noted that, prior to the sell-off, AI optimism had fueled a rally that saw U.S. equities rise for nine consecutive weeks. But he pointed to stronger-than-expected U.S. jobs data on Friday — which prompted markets to reconsider the Federal Reserve’s policy path — as well as stretched positioning and questions about the funding demands of the AI cycle’s next stage, as drivers of the change in sentiment late last week.
“When markets have rallied hard, elevated expectations and concentrated positioning can make them more vulnerable to disappointment. That does not necessarily signal a turn in the broader cycle. It may simply mark a repricing from very optimistic levels,” Willis said.
“Our broad view remains constructive. The message is discipline, not retrenchment,” he added. “The case for risk assets still rests on resilient growth and earnings, but selectivity matters more when valuations are elevated and the macro backdrop is less straightforward.”
In a note sent to clients on Monday evening, analysts at Citi said that following the recent decline, positioning in U.S. equity markets was “incrementally healthier” and more balanced.
Noting that Friday marked the Nasdaq Composite’s steepest single-day drop since April 2025, Citi’s analysts pointed to the hotter-than-expected labor market figures reinforcing expectations of potential Fed hikes later this year.
Citigroup separately raised its year-end forecast for the S&P 500 on Monday to 8,100 from 7,700, implying upside of almost 10% for the index, which has already gained more than 8% since the start of 2026.
But Citi’s analysts warned on Monday evening that trades made over the past week have created a “bifurcated market” that could be vulnerable to disappointing headlines.
“While $14.7 billion in new shorts marked the largest weekly short build seen over the year, the simultaneous addition of $4.78 billion in new longs — with no evidence of long liquidation—highlights two distinct camps: macro-driven bears and investors maintaining strong conviction in buying AI-driven pullbacks,” they said.
“With 72% of Nasdaq longs still in profit and positioning size at extreme levels, the market remains vulnerable to downside convexity, where negative catalysts could trigger accelerated long liquidation. In particular, if this week’s tech earnings announcements disappoint, this could trigger further near-term long liquidation.”
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