S\&P 500 Correction: Fidelity’s Timmer Predicts Market Bottom Based on Presidential Cycle Analysis

Market Forecast Revision by Fidelity’s Jurien Timmer

Jurien Timmer, Fidelity’s Global Macro Director, has recently revised his market forecast following a notable decline in stock prices. In a detailed analysis, Timmer unveiled a graph via this link that showcases the average returns of the S&P 500 during various phases of the American presidential cycle. According to the data, historical trends indicate that the current downturn could potentially conclude by mid-year.

Analyzing Presidential Cycles

Timmer’s analysis draws on a long-term perspective, emphasizing that while historical patterns can offer guidance, they should not be applied too rigidly. He highlighted that the mid-cycle year, similar to what was observed in 2022, typically follows anticipated market movements. Presently, as the market finds itself in what Timmer describes as the “fifth year” of the cycle—an interval usually marked by early declines—he anticipates that the market will undergo a prolonged, modest correction during the first half of the year.

Historical Corrections and Future Expectations

Reviewing an extensive dataset that includes 26 corrections of the S&P 500 dating back to 1906, Timmer pointed out that the ongoing decline aligns with several previous market corrections. He forecasts that the index might descend to levels nearing 4,900 points. Although a brief recovery was observed last week, the overall market has remained entrenched in a roughly 10% correction, leaving investors uncertain as to whether future movements will lead to a rebound or further decline.

By maintaining a careful interpretation of historical trends while acknowledging the unique nuances of the current economic environment, Timmer’s analysis offers valuable insights for investors navigating a period of volatility and adjustment.