VOO Is Down 7% From Its January High. The Case for Staying Put Has Never Been Stronger

As of March 30, the Vanguard S&P 500 ETF (NYSEMKT: VOO) was down 7% from its all-time high. It’s due to the first significant fall for the S&P 500 in roughly a year.

This type of pullback may be uncomfortable, but it’s not unusual. Pullbacks of at least 5% typically happen on average about once a year. In a sense, we’re right on schedule. But it’s how investors react to this that will be the difference between a temporary road bump and something more damaging.

Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »

Several factors at play make me feel like this current pullback is more opportunity than warning.

• Pullbacks of 5%-10% in the S&P 500 are common and happen around once a year.

• S&P 500 earnings are expected to grow 13% year over year in the first quarter of 2026. If it happens, it would be the 6th consecutive quarter of double-digit growth.

• Signs of a near-term resolution to the Iran War could add a bullish catalyst for stocks.

• The S&P 500 is trading at a forward price/earnings (P/E) multiple of 19 for the first time in a year.

While short-term performance and volatility can be driven by any number of factors, long-term performance is usually a product of corporate earnings growth. When earnings are growing, stock prices have justification to go higher.

That’s exactly what we’re seeing now. Despite concerns about inflation, the labor market, and economic weakness, S&P 500 earnings are expected to grow 17% in 2026 and another 17% in 2027.

With valuations contracting in the early part of this year, a double-digit earnings growth story provides a powerful backdrop.

The war is the biggest factor that’s triggered stock market volatility this year. It’s sent oil prices significantly higher, raised inflation expectations, and taken the odds of a Fed rate cut this year almost completely off the table.

But there are signs that the conflict might be nearing a conclusion. The stock market has already responded as if it’s a likelihood at this point. If a resolution is reached and the Strait of Hormuz reopens, investors are likely to react positively.

Data source: Vanguard, as of 3/31/26.

The catalysts that support buying the Vanguard S&P 500 ETF are:

• Strong earnings growth over the next two years or more

• An imminent end to the Iran War

• Lowest price/earnings ratio in roughly a year

The current volatility that the market is experiencing is making a lot of investors uncomfortable. But it also presents a unique buying opportunity.

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $532,066!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,087,496!*

Now, it’s worth noting Stock Advisor’s total average return is 926% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of April 5, 2026.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

VOO Is Down 7% From Its January High. The Case for Staying Put Has Never Been Stronger was originally published by The Motley Fool