The stock market appears to be in the midst of a reset, but Bank of America We believe investors should not expect a significant rebound at this time.
Chief Investment Strategist, Bank of America Michael HarnettAccording to Seeking Alpha, the conditions that typically herald the end of a brutal market correction are only partially in place.
Hartnett said the current turmoil in the stock market follows a familiar pattern, and we’re seeing it driven by “Exogenous shocks when overly bullish.“
In other words, markets become unusually optimistic, only in response to external events, e.g. iran war Disrupting investor sentiment and triggering a widespread reset.
Here’s how the major stock indexes performed over the past week.
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S&P 500 Index:6,878.88 to 6,740.02down about 2.0%
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Dow Jones Industrial Average:48,977.92 to 47,501.55down about 3%
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Nasdaq Composite Index: 22,668.21 to 22,387.68down about 1.2%.
Source: Reuters
The S&P 500 last traded at 6,740.02 Friday, March 6, 2026, according to Associated PressRoughly decreased 1.5% year to date.
For perspective, when I last covered the S&P 500 on March 2, 2026, it closed at 6,881.62;Since then it has declined 141.60 pointsor about 2.1%.
Focus primarily on the cover of that piece Morgan Stanley’s Mike Wilson It’s “diversification,” meaning the S&P 500 remains stable even as many stocks plummet.
That said, this overlaps with Harnett’s point that markets basic knowledgeGoing through a reset.
Harnett believes some key parts of the reset are already visible in current price action.
However, the final piece of the puzzle has not yet appeared.
From a historical perspective, these resets tend to occur in safe haven assets Factors such as oil and the dollar weakened, but he said markets were yet to see the results of that.
Hartnett believes that until then, investors should not expect “Huge upside potential for trading“.
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2020: 3,756.07 Year-end closing; upward 16.3% This year with 3,230.78 at the end 2019
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2021: 4,766.18 Year-end closing; upward 26.9% This year
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2022: 3,839.50 Year-end closing; down 19.4% This year
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2023: 4,769.83 Year-end closing; up 24.2% This year
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2024: 5,881.63 Closed at the end of the year;up 23.3% This year
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2025: 6,845.50 Closed at the end of the year;up 16.4% This year
Source: S&P 500 closing prices via FRED/S&P Dow Jones Indexes and YCharts historical data
Harnett’s paper on the stock market depends on market rotation developed during correct.
This is typically when money flows from crowded winners to assets that absorb most of the losses.
He believes the stock market’s sell-off zone has bottomed out. it points to part of Technology space and high risk assets It has undergone significant downsizing in recent months.
Related: Morgan Stanley delivers brief two-word verdict on S&P 500
“The first condition is when an “oversold” asset bottoms out”, Hartnett wrote, laying out how this process may already be taking place on a global scale. software stocks, big tech giants, and “The Magnificent 7,” and such areas private credit, bank loan,even Bitcoin.
As a result, those unpopular market segments have captured a large portion of the market.
At the same time, we are seeing the exact opposite dynamic beginning to emerge elsewhere.
Assets that investors piled into during the recent rally are now retreating.
Harnett highlights recent selling pressure gold and chip stockstogether with emerging markets, Europeanand bank stocksreflecting a broader rebalancing of portfolios following the latest round of volatility.
“The second condition is met when an “overbought” asset is sold,” Harnett explained.
In short, he believes capital continues to rotate among different asset classes and investors are unwinding positions that were tight during the last rally.
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SPDR Gold Stock ETF (GLD): Down nearly 2.1%
this SPDR Gold Stock ETFtracking the price of the shiny yellow metal falling from around It was $483.75 on February 27 and $473.51 on March 6dropped nearly 2.12%.
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VanEck Semiconductor ETF (SMH): Down about 6.4%
this VanEck Semiconductor ETFwhich measures chip space, from It was $406.37 on February 27 and $380.56 on March 6dropped nearly 6.35%.
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iShares MSCI Emerging Markets ETF (EEM): down about 8.4%
this iShares MSCI Emerging Markets ETFAn index tracking stocks in major emerging economies from $62.58 on February 27 to $57.32 on March 6a drop of about 8.41%.
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Vanguard FTSE Europe ETF (VGK): Down about 6.3%
this Vanguard FTSE Europe ETF Moved from $90.17 on February 27 to $84.46 on March 6about a drop 6.33%.
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SPDR S&P Bank ETF (KBE): Down about 2.5%
this SPDR S&P Bank ETFTracking losses in a basket of major U.S. bank stocks $61.05 on February 27 to $59.55 on March 6falling every week by approx. 2.46%.
Source: Yahoo Finance
Related: Morgan Stanley drops direct reality check on gold surge
This article was originally published by TheStreet on March 9, 2026, and first appeared in the Investment section. Click here to add TheStreet as your preferred source.
