Ben Cowen: 'Everyone Expected It' Didn't Stop the Q4 Selloff

The Q4 selloff in US stocks is here, and Benjamin Cowen isn't surprised. The market analyst says it arrived on schedule, driven by three midterm cycles. It's not an exact science, he admits, but the Nasdaq's more-than-10% drop mirrors 2018.

Cowen says he flagged the Q4 risk all year while stressing it was never guaranteed. He points to 2018, when stocks fell 23% late in the year, and 2022, when another roughly 23% drop started in the third quarter. By his numbers, the Russell index is down 11% to 12%, the Dow Jones Industrial Average about 7%, and the S&P 500 roughly 4%.

Skeptics argued weeks ago that such a widely expected correction would never happen. Cowen says that same objection preceded Bitcoin's lows in February and the summer. He also points to Google's post-earnings slide as proof the correction is real — parent Alphabet closed 12.6% lower on Oct. 29, according to Trefis.

The slide follows a 2.86% Nasdaq drop on Friday, with analysts flagging midterm and AI risks this week. Cowen says the Iran war and today's midterm elections are adding volatility. He expects the S&P 500 to be among the last to fall before the administration responds with policy.

Cowen expects a low within the next couple of months, followed by a bounce. He sees the OpenAI IPO — which he guesses could land in early 2027 — as the next major narrative. For Bitcoin, he says the same Q4 bottoming pattern applies.

Not everyone's bearish. Morgan Stanley strategist Mike Wilson sees any dip as a buying opportunity, saying a drop toward 7,100 on the S&P 500 could precede a rally to 8,000. The split tests whether broad expectations really shield markets from seasonal drawdowns.