S&P 500 Extends Rebound to 7,757: Is the October Correction Over?
Three sessions ago, the S&P 500 looked like it might be starting something ugly. Today it looks like it finished something normal.
The index rose for a third consecutive session on Wednesday, closing at 7,757 and completing a recovery of 1.5% from Friday’s correction low of 7,659. More than 60% of the two-day, 2.4% slide has now been reclaimed, and the character of the bounce keeps improving: volume has been orderly rather than frantic, leadership has rotated back to the growth names that drove the year’s gains, and each session’s low has settled above the previous one’s close. The market is climbing a staircase, not bouncing off a trampoline.
The anatomy of the recovery
Corrections in bull markets end when the reason they started stops mattering, and this one’s reason was specific: the strong dollar’s squeeze on multinational earnings. The evidence that the squeeze is easing has accumulated almost daily. Sterling has broken to multi-month highs above 1.34. The euro has reclaimed the 1.12 handles after touching 1.11 last week. The dollar index is at its softest level in five weeks. For the roughly 40% of S&P revenue earned abroad, the translation math is quietly turning from headwind to neutral — and the market, which prices the future rather than the present, is pricing the turn before it fully arrives in the earnings data.
The earnings calendar has validated the patience. The week’s heavyweight reports — the megacap technology names that drove both the year’s rally and the October slide — delivered a verdict that bulls could live with: solid beats, resilient margins, and guidance that acknowledged the dollar without capitulating to it. Two weeks ago, the market punished anything short of perfection. This week, it rewarded adequacy. That’s what recovering risk appetite looks like.
Credit markets, the referee this column watches most closely, have stayed calm throughout and are now confirming the recovery. Investment-grade spreads have tightened back to their cycle tights, and the high-yield index has retraced its entire October widening. Every equity decline of the past three decades that eventually became a bear market began with credit stress. The credit market is not just saying this correction is over — it’s saying it never believed in it at all.
The case for caution, stated fairly
The honest bear case hasn’t disappeared; it has merely gone quiet. Valuations remain stretched by historical standards, with the forward multiple pricing in a soft landing that hasn’t fully arrived. The heaviest week of earnings isn’t over — Thursday and Friday bring another wave of reports capable of reviving the guidance jitters. Seasonality cuts both ways: late October has a documented habit of producing violent final selloffs before the November–December rally begins, and the market is not yet through that window. And the dollar’s pullback, while real, is only five weeks old and could reverse on a single hot inflation print.
There’s also the matter of the chart. The index has now rallied back into the 7,750–7,800 zone where the October decline began — precisely the area where trapped sellers from the breakdown might look to exit at breakeven. Supply overhead is real, and the market has to chew through it before the path to new highs is clear.
The levels that answer the question
The market has drawn the verdict zones with unusual clarity. A close above 7,800 — reclaiming the pre-correction consolidation shelf — would put the index within 0.6% of the October 6 record at 7,844 and would historically favor a run at new highs into the seasonally strong final two months. That is the bull case completing.
A rejection between 7,780 and 7,800 that sends the index back below 7,700 would instead build the right shoulder of a short-term top and set up a retest of 7,659 — and possibly the deeper 7,600 support that the October low barely avoided. That is the bear case keeping its foothold.
Below, the correction-low line at 7,659 remains the single most important number in the market. Every session it holds, the odds shift toward the bulls. A close below it would flip the entire structure and demand a reassessment this column would happily provide.
Until one of those levels breaks, the answer to the headline’s question — is the correction over? — is the unsatisfying but accurate one: probably, not certainly. The evidence leans decisively that way: the cause reversed, the credit stayed calm, the earnings held, and the buyers returned at the first level that mattered. But markets charge a fee for certainty, and it isn’t due until the index either takes out 7,844 or breaks 7,659. Position for the former, respect the latter, and let the week’s remaining reports pay the fee.
Disclaimer: This is market commentary, not investment advice. Trading FX, commodities, equities and crypto carries substantial risk of loss. Past performance is not indicative of future results.
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