VOO Stock Draws Attention as Vanguard S&P 500 ETF Dips About 6% From October High

The Vanguard S&P 500 ETF (NYSEMKT: VOO), a fund that tracks the S&P 500, has fallen roughly 6% from its October high through the close on November 5, following a sharp sell-off after the US midterm elections. The drop has drawn attention from long-term investors who see the pullback as a possible chance to buy at a lower price.

Why the election matters for the market

The midterm results gave Democrats control of both chambers of Congress. Commentators writing for The Motley Fool say this raises questions about the future of the artificial intelligence boom, including whether new rules could slow innovation, limit data center construction or make it harder to fund large AI infrastructure spending.

Mega-cap technology stocks have driven much of the market's gains in recent years, and some valuation measures leave little room for disappointment. One commentator argues the election may have acted as a catalyst for investors to reassess those risks, rather than creating them.

Earnings and other pressures

Corporate earnings remain a source of support. According to FactSet, S&P 500 companies were on pace to deliver roughly 30% year-over-year earnings growth in the third quarter.

Several pressures remain. Inflation is still elevated, oil prices are above $90 per barrel, and long-term Treasury yields are weighing on balance sheets and equity valuations. Without strong earnings growth, analysts say the market would have a harder time justifying current prices.

• VOO is down roughly 6% from its October high, as of November 5.
• S&P 500 companies were on pace for about 30% year-over-year earnings growth in Q3, according to FactSet.
• Oil is trading above $90 per barrel and inflation remains elevated.

Bear market concerns and defensive income funds

Some investors are preparing for a sharper downturn. One Motley Fool columnist says the market is trading near all-time highs and that parallels with the dot-com bubble are emerging in artificial intelligence. He has added two income-focused funds to his holdings: the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and the Amplify CWP Enhanced Dividend Income ETF (NYSEMKT: DIVO).

The Schwab fund tracks the Dow Jones U.S. Dividend 100 Index and charges a management fee of 0.06%, according to the column. The Amplify fund sells covered calls on a portion of its holdings, and the columnist says its yield has historically ranged from 4% to 6% in a given year. These views are opinions and have not been validated by independent analysis.

What we know so far

The VOO pullback is confirmed by the price movement through November 5, but analysts disagree on whether it marks a buying opportunity or the start of a longer decline. Writers at The Motley Fool note that a 5% dip has been rare this year and that corrections have often reversed quickly. The key risk, they say, is whether AI spending slows and earnings expectations fall with it. Broad evidence of such a slowdown has not yet appeared.

Readers should note that the Motley Fool articles are commentary, not investment advice, and that conditions can change quickly.

This article is for information only and is not financial advice.