The recent market pullback is nothing more than an April Fool’s moment for investors, according to James Demmert, Chief Investment Officer of Main Street Research. He predicts a strong 27% rally in the S&P 500 by year-end, positioning it at 7,050 despite the market’s rocky start.
For RIAs advising clients through the current volatility, Demmert’s perspective offers an important counterpoint to the dominant narrative of economic concern. The S&P 500 just recorded its worst quarterly performance since 2022 and its weakest opening to a year since 2020. Yet Demmert remains firmly bullish, urging advisors to look beyond the noise and capitalize on market weakness.
“This is no time to sell,” Demmert said. “The economic fundamentals remain resilient, and this correction is temporary.”
While most analysts were blindsided by the Q1 downturn—despite nearly all major firms projecting gains—Demmert sees opportunity in the disconnect between sentiment and fundamentals. He argues that fears of a prolonged downturn are exaggerated, and RIAs should view the current environment as a buying opportunity.
Demmert emphasizes that bull markets are rarely derailed without an external shock. “The U.S. economy is still strong,” he said. “Labor markets remain tight, and while analysts are trimming corporate profit estimates, they’re missing the bigger picture. This economy is going to surprise people.”
For advisors managing client portfolios, his message is clear: stick to your long-term allocation strategy and avoid emotional reactions to short-term noise. Demmert notes that investors are overly focused on sentiment shifts rather than the catalysts that have powered the market to new highs—robust earnings, stable growth, and improving productivity.
“The correction is fueled more by anxiety than data,” he said. “Once seasonal and macro concerns fade, the rebound will be swift.”
His advice to RIAs is to use this period to rebalance portfolios toward quality growth names and sectors positioned to benefit from economic resilience. Demmert remains particularly optimistic about large-cap tech, healthcare, and industrials.
“Corrections like this are when great gains are made,” he said. “We’re preparing for a strong second half—and we think others should, too.”
