A 6% slide in the Vanguard S&P 500 ETF after the midterm elections may present a rare discount for patient investors.
Key points
- VOO fell about 6% after the midterms, creating a discount relative to its recent highs.
- FactSet projects roughly 30% YoY earnings growth for S&P 500 firms in Q3, supporting current valuations.
- Analysts suggest the pullback does not warrant a change in long‑term allocation and may be a buying chance.
The Vanguard S&P 500 ETF (VOO) slipped roughly 6% from its October peak to the close on Nov. 5, a move the article attributes to a sharp post‑election sell‑off that has left the fund trading at a discount not seen since early April.
The decline follows the November midterm elections, which gave Democrats control of both chambers of Congress and sparked worries that new policy could curb the AI boom, limit data‑center construction, or slow the billions of dollars being poured into AI infrastructure, all of which have buoyed mega‑cap tech stocks that dominate recent market gains.
Why VOO fell
Despite those concerns, FactSet data cited in the piece shows S&P 500 companies on track to deliver about 30% year‑over‑year earnings growth in the third quarter, a rate that currently helps offset lingering headwinds such as elevated inflation, oil prices above $90 a barrel, and higher long‑term Treasury yields.
The Motley Fool analyst argues that long‑term investors need not overhaul their asset allocation; instead, the sizable pullback could be viewed as a chance to buy VOO at a reasonable discount, especially since the macro backdrop has not fundamentally shifted and earnings growth remains robust.
Earnings growth as a cushion
The article also notes that the Motley Fool’s Stock Advisor did not include VOO among its current top‑10 stock picks, reminding readers of the publication’s own disclosures and the fact that the author holds no position in the securities discussed.
Reader questions
What triggered the recent decline in VOO?
The article links the drop to a post‑election sell‑off and concerns that new Democratic control could lead to policies that slow AI investment and data‑center expansion.
How strong is earnings growth for S&P 500 companies according to the article?
FactSet data cited in the piece indicates the index’s constituents are on pace for about 30% year‑over‑year earnings growth in the third quarter.
Should long‑term investors adjust their holdings of VOO now?
The analyst recommends keeping the existing allocation and viewing the dip as a potential buying opportunity, noting that the macro environment and earnings outlook have not dramatically changed.
Source: finance.yahoo.com
