The S&P 500 has slipped 1.9% over the past month, while the Nasdaq has dropped nearly 5%, as a volatile June raises concerns of a broader pullback. The CBOE Volatility Index (VIX), often called Wall Street's fear gauge, surged 15.4% in the same period, signaling growing unease among investors.
David Laut, chief investment officer at Kerux Financial, warns that the current turbulence may be just the beginning. "We believe the market volatility seen so far in June is the tip of the iceberg, which could turn into a 10-20% correction in the broader markets," Laut said. He cited elevated valuations, geopolitical uncertainty, and low summer trading volumes as conditions ripe for a double-digit decline—the first since 2025.
Bank of America's global head of technical strategy, Paul Ciana, echoed this caution. In a note released Friday, Ciana described a "three-wave correction" for the S&P 500, with a break below the June 10 low of 7,334 reinforcing a corrective phase. He targets 7,122 to 6,968, warning that a marginal new high near 7,741 could be a "bull trap." Ciana added that a prolonged double-correction pattern into October remains a key risk.
Despite the unsettling outlook, volatility creates openings for advisors. A recent survey by Insperex of 783 financial advisors found that 78% said volatility increases client engagement and communication, and the same proportion said it generates opportunities to demonstrate value. Research from Trueshares, released last year, showed that over 10 instances when the VIX surged 50% in a single month, the S&P 500 delivered above-average returns 12 months later.
Laut advises a cautious stance on technology stocks. "Staying underweight technology stocks is the name of the game for right now," he said, noting that the Magnificent Seven have had a disappointing 2026 so far. He recommends diversification into small-cap, international, and value stocks, which have provided asymmetric returns relative to tech. Key catalysts for the rest of the year include oil prices, the AI story and IPOs, and interest rates.
On interest rates, Laut sees no imminent move from the Federal Reserve. "A hike would require an especially rare set of circumstances, such as a year or longer of $100 per barrel oil," he said. The Fed, now led by Chair Kevin Warsh, held rates steady at its early-June meeting, following three cuts in 2025. Warsh faces pressure from President Donald Trump to lower rates, but inflation remains sticky, fueling speculation of potential hikes.
Advisors will watch Warsh closely when he speaks at the European Central Bank Forum in Sintra, Portugal, on Wednesday. If he reiterates the importance of monetary policy independence, markets may expect the Fed to maintain its current path. Anthony DeGerolamo of DeGerolamo Financial Strategies urges advisors to review portfolios now, noting that while a correction is widely expected, its timing and severity remain uncertain.
For advisors navigating this environment, deepening client relationships amid volatility can boost revenue without new accounts, as highlighted in recent research. Additionally, the AI sector's volatility, exemplified by Nvidia's $1.3 trillion chip selloff, underscores the need for careful positioning.
