Wall Street still bullish as stocks slide on weak jobs data
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Stocks are sinking and the VIX, a measure of volatility, is spiking, off the back of weak jobs data and new tariffs. Yet Wall Street is still bullish.
Why it matters: Strategists who spoke with Axios believe the long-term upside for the stock market outweighs any near-term weakness and suggest buying dips, especially in tech.
What they're saying: "The April tariff-driven pullback serves as a reminder to avoid overreacting," Keith Lerner, co-chief investment officer and chief market strategist at Truist, wrote in a note to clients.
- "The dominant bull market theme – artificial intelligence and technology – remains intact, with earnings in those sectors still strong," he added.
- The pullback comes amid increasing calls that valuations are stretched and stocks have gotten overvalued.
Driving the news: The market is capping off the week with two major headwinds.
- A weaker-than-expected jobs report coupled with eye-popping revisions indicate cracks in the labor market, to say the least.
- The Trump administration released a new slate of tariffs on dozens of nations.
- Stocks were already down. Then the labor data crossed.
Zoom out: It's not just the labor market and tariffs plaguing investors – it's also the time of year.
- August and September are seasonally weak months for financial markets.
- That choppiness was overwhelmingly anticipated by Wall Street.
Yes, but: This "soft patch" will not derail the bull market, thanks to a slew of catalysts, says Jeff Mills, chief investment officer at Bessemer Trust.
- "We're on the precipice of a fairly large boom in capital spending," he says.
- Capex is still expanding especially amongst the AI names, which could fuel further economic growth and earnings growth.
The intrigue: Despite the selloff, large-cap tech may still offer safety as these stocks lead in earnings growth, free cash flow, and are "insulated" from typical business cycle swings, Mills tells Axios.
- "When there's a drought, people will pay more for water and when growth slows, people pay more for growth, and [tech] is where the growth is," he notes.
- Amid the risk-off trade Friday, the Magnificent 7 names were all under pressure even after a record breaking week of earnings from four members of the group.
The bottom line: Remember that volatility is part of the game for investing.
- "There was some complacency," said Joe Mazzola, Charles Schwab's head trading and derivatives strategist.
- Given the uncertainty, Wall Street is looking ahead to 2026 in lieu of focusing on near-term volatility.
