How One Bloomberg Analyst Called the 2025 Correction Six Months Early — and What He Sees Now

Being correct when it was uncomfortable is the only way to gain a certain level of credibility. Genuinely, specifically, early—not contrarian for the sake of being contrarian, nor hedged with enough qualifications to mean nothing either way. The kind of call that appears in a January research note, is courteously disregarded throughout the spring, and then reappears in August when the S&P 500 is declining and editors are frantically trying to find someone who anticipated it.

In the summer of 2025, a few analysts were in a similar situation. Mike Wilson of Morgan Stanley, Julian Emanuel of Evercore, and a few strategists tracked by Bloomberg had been warning about the correction risk for months before it materialized. The direction was the same, but the details differed—Wilson was anticipating a 10% decline, while Emanuel was projecting something closer to 15%. The consequences of the trade war, the sourcing of consumer spending data, the early impact of Trump’s tariff policies on corporate balance sheets, and an equity market that was so hot for so long that almost any negative catalyst could cause a reset. On August 4, 2025, Bloomberg released the official warning. The sell-off had already started by that point.

In hindsight, the percentage wasn’t what gave the call credibility; many analysts set correction targets, and one of them ends up being correct. It was the logic. There was not a single shock event to be concerned about. It was a structural argument: the S&P 500 has historically lost about 0.7% on average during August and September over the past three decades, compared to a monthly gain of 1.1% during all other months; valuations had stretched past the point where they could absorb bad news gracefully; and consumer spending data was already softening before most investors were paying attention to it. In retrospect, that final data point seems obvious, but in January, it hardly ever appears in client calls.

When the correction was made, it was disruptive enough to be noticeable but orderly enough to prevent panic. Before rebounding, the S&P 500 nearly fell 10% from its all-time high in January 2026. This decline was initially caused by the escalating Iranian conflict, which raised energy costs and interfered with international shipping routes, adding another level of uncertainty to a market already struggling with tariff volatility. The MSCI EAFE and Emerging Markets indexes both fell between 10% and 13% before regaining most of the ground, indicating that foreign equity markets were more severely impacted. The S&P 500 had recovered to its pre-Iranian conflict close by mid-April 2026, which was either a sign of true resilience or, depending on who you asked, a market that hadn’t fully processed the risks still in the pipeline.

In a piece published in late March, Larry Berman of BNN Bloomberg outlined the crucial technical support level as follows: the 61.8% retracement of the 2025–2026 rally is located close to 5,650 on the S&P 500, and the 38.2% retracement of the longer 2022–2026 rally is located in roughly the same region. Investors are now keeping an eye on that cluster of support, which is between 5,650 and 5,900, especially if the Iran situation continues into May without a resolution. Berman believes that the scenario is more likely to be somewhere between the prolonged rate-hike pain of 2022 and the acute COVID shock of 2020. It is likely to be shorter, less severe, but not quite finished either. “It’s likely somewhere between the acute COVID-19/tariff shock declines and the elongated rate hike cycle but leaning more towards a shorter resolution,” he said. Someone who has been observing markets for a quarter can be distinguished from someone who has been doing so for a longer period of time by this kind of meticulous framing.

However, the analysis becomes truly fascinating when looking at the future. Earnings for corporations have not crashed. The fear that pervaded the first quarter of 2026 was that they were supposed to. Rather, according to Bloomberg, FactSet, and S&P Capital IQ, the consensus estimate for full-year 2026 earnings growth is now higher than 16%, and S&P 500 companies reported fourth-quarter revenue and profit growth above analyst expectations. That figure served as the basis for Terry Sandven of U.S. Bank Asset Management Group’s argument that the correction was a buying opportunity rather than the start of something worse. He might be correct. It’s also possible that the 16% growth in earnings is a projection based on presumptions that the Iranian conflict will be resolved swiftly and that energy prices will return to normal, both of which are still genuinely uncertain as of this writing.

A picture that is cautiously constructive but not complacent is what the analysts who predicted the correction early appear to be coming to. The Magnificent Seven, who moved almost in unison for the majority of 2025 before their correlation broke down, are no longer the only market leaders. This broadening is significant because it implies that fundamentals rather than a single focused narrative are driving the rally, to whatever degree it persists. In simple terms, corrections typically happen when risks transition from potential to economic reality, according to Bill Merz of U.S. Bank. The majority of the risks are still potential. How long that stays true is the question. Observing it from the outside, it seems that the analysts who were correct in 2025 are being suitably cautious about claiming certainty in 2026. Considering how the previous cycle transpired, this is probably the most honest thing anyone on Wall Street can say at the moment.