Despite the volatility we’ve seen in the equity markets this year, the S&P 500 (SNPINDEX: ^GSPC) has mostly traded sideways. Its year-to-date return has only varied between up 2% to 3% and down roughly 3%, but not much beyond that. Even after a rough last week, it’s down about 5% year-to-date.
Of course, many other areas of the market have done better. Dividend, value, and defensive stocks have all outperformed thanks to a big rotation out of megacaps and tech stocks. Overall, market breadth has improved, and the S&P 500 still hasn’t seen the big correction that many investors fear.
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The way that conditions have changed over the past few weeks bodes well for the S&P 500 in the short-term. There are two reasons specifically why I think the Vanguard S&P 500 ETF (NYSEMKT: VOO) could be one of the best opportunities in the market right now.
For better or worse, the S&P 500 is driven by megacap tech stocks. From 2023 to 2025, they almost single-handedly pulled the major averages higher. In 2026, their underperformance masked strength in a lot of other areas of the market.
But the added volatility over the past few weeks has, somewhat surprisingly, triggered a return to tech. Perhaps investors view large-cap tech as something of an equity safe haven in times of turmoil. Either way, it’s helping make the S&P 500 a leader once again.
When tech is leading, the Vanguard S&P 500 ETF becomes one of the best options in the market. Its top-heaviness helps ensure that it will outperform other more diversified areas of the market when tech is doing well.
As of March 17, the S&P 500 and Nasdaq-100 indexes are 4% and 5% below their highs, respectively. This is largely a product of the uncertainty created by the conflict in Iran.
As I’ve discussed before, geopolitical skirmishes tend to be more short-term in nature. Once the dispute or event is resolved, market conditions often tend to revert back to the way they were. If the situation in the Strait of Hormuz gets settled, it’s not unreasonable to think that oil prices will start to move back to where they were prior to the conflict. The market could start pricing in rate cuts again. Stocks and bonds could begin rallying in response.