A bull and bear statue stands outside the Frankfurt Stock Exchange on April 7, 2025 in Frankfurt, Germany.
Florian Wiegand | Getty Images News | Getty Images
Global stock markets rose modestly on Tuesday, showing a tentative recovery from volatility caused by aggressive selling in global technology stocks.
U.S. stocks came under pressure on Friday, led by a sharp decline in semiconductor stocks. This negative momentum spilled over into Asian trade, while European tech stocks also fell. This was triggered by a rotation of AI-related stocks following Broadcom’s lackluster earnings report.
By Tuesday, global stock prices appeared to be recovering from the decline. U.S. stock futures were last seen broadly higher, with futures tracking tech-led stocks. Nasdaq 100 Add 0.7%.
European tech stocks were on an upward trajectory for the second day in a row, with regional markets also performing well. Stocks 600 Technology stock indexes recoup some of Friday’s losses, while South Korean tech stocks weigh heavily Kospi The index rose more than 8% on Tuesday after two days of declines.
“Volatility is the price of admission”
Many investors remain bullish on stocks, but expect more disruption on the path to higher returns.
Robert Edwards, chief investment officer at Florida-based Edwards Asset Management, said in a note that the drop in tech stocks was “a gift to investors.”
He described the market movement as a “sawtooth wave pattern” and said, “We continue to buy on the spur of the moment.”
“Despite the noise, investors know that strong fundamentals remain, including strong sales and earnings growth, so the sharp pullback has been met with aggressive buying,” he said. “This is what a bull market looked like in its prime, characterized by violent ups and downs, which can be unpleasant at times, but the overall trend is up.”
Edwards Asset Management manages $3 billion worth of assets. S&P500 It is expected to reach 7,700 points by the end of the year, an increase of about 4% from Monday’s closing price. Edwards said his forecasts suggested much of this year’s market gains have already been priced in, but he expected further volatility to create “ample buying opportunities.”
“These buying opportunities could come from an impending 7-12% correction due to uncertainty surrounding the appointment of new Fed Chairman Kevin Warsh and further delays in opening the Strait of Hormuz, which will keep oil high for long enough to reignite inflation concerns,” he said.
Edwards also noted that while upcoming mega-cap IPOs are “the adrenaline of a bull market reaching its peak,” the “euphoria” signal that typically indicates a market ceiling is not yet present.
“We’re at the beginning of a buying frenzy that’s worth riding,” he said. “Our message to investors is to stay invested, be disciplined, and don’t be afraid to exit. The returns are real, the cash being parted with is huge, the exciting IPOs are just getting started, and the macro tailwinds of Hormuz reopening, low oil prices, and Fed cuts are likely to come. This is where the big selloff is born. Volatility is the price of admission.”
Anthony Willis, senior economist at Columbia Threadneedle Investments, said in a note Tuesday that the recent market downturn “looks more like a price flare-up than a fundamental break in the growth story.” But he noted that the selling pressure is a reminder that “strong fundamentals do not eliminate volatility.”
“Friday’s decline in technology stocks and the subsequent weakness across the region suggests that markets are reassessing the context in which they were looking increasingly comfortable,” he said. “The question is not whether growth has collapsed, but whether markets have adapted to the challenging combination of resilient data, higher interest rate expectations and persistent geopolitical risks.”
Willis noted that before the plunge, AI optimism had fueled the rally in U.S. stocks, which had been rising for nine straight weeks. But he pointed to Friday’s stronger-than-expected U.S. jobs report, which prompted markets to reconsider the Fed’s policy direction, as well as over-positioning and questions about capital needs in the next stage of the AI cycle, as factors for the shift in sentiment late last week.
“When a market rallies violently, heightened expectations and concentrated positioning can leave the market vulnerable to disappointment. It does not necessarily signal a broader cycle turn; it may simply indicate a recalibration of prices from highly optimistic levels,” Willis said.
He added: “Our broader view remains constructive. The message is discipline, not cuts.” “The legitimacy of risk assets remains dependent on resilient growth and returns, but as valuations rise and the macro context is less straightforward, selectivity becomes more important.”
In a note sent to clients Monday night, Citi analysts said U.S. stock market positioning has become “gradually healthier” and more balanced following the recent sell-off.
Citi analysts noted Friday was the biggest single-day decline in the Nasdaq Composite Index since April 2025, and noted that better-than-expected labor market numbers strengthened expectations that the Fed could raise interest rates later this year.
Separately, Citigroup on Monday raised its year-end forecast for the S&P 500 to 8,100 from 7,700, suggesting nearly 10% upside for the index, which has already risen more than 8% since the beginning of 2026.
But Citi analysts warned on Monday night that the past week’s trading had created a “bifurcated market” that could make it vulnerable to disappointing headlines.
“The $14.7 billion in new shorts marked the largest weekly short accumulation of the year, while the simultaneous addition of $4.78 billion in new longs, with no evidence of long-term liquidations, highlights two distinct camps: macro-driven bears and investors who remain strong believers in AI-driven buybacks,” they said.
“72% of Nasdaq Although longs are still profitable and position sizes are at extreme levels, the market remains vulnerable to downward convexity, and negative catalysts could cause accelerated long liquidations. “In particular, if this week’s tech company earnings reports are disappointing, we could see more liquidations in the near term.”
