The stock market this week had to absorb a fresh spike in oil prices, talk of the need to slow down the artificial-intelligence race lest it kill us all, and the first interest-rate hike by the Federal Reserve in more than three years.

Little wonder the S&P 500 continues to spin its wheels since hitting a record high in mid-August, even though there’s been intense sectoral volatility beneath the surface.

But it’s that churn that has thrown up a notable opportunity for investors, according to our call of the day from a team of strategists at Truist led by Keith Lerner.

In commentary published Thursday, Truist notes that since June 2 the S&P 500 is essentially flat, even as consensus earnings estimates have continued to rise. As a result, the index’s forward price-to-earnings multiple has declined to approximately 19, which is near the valuation low reached during the spike in oil prices at the start of the Iran war.

“This distinction matters,” says Truist. “A sideways market with rising earnings is fundamentally different from a market whose valuation is falling because earnings expectations are deteriorating. In this case, time and earnings growth have allowed valuations to compress without requiring a major decline in the index.”

Source: Truist

And this valuation reset has been even more meaningful for technology stocks. The sector’s forward P/E has fallen from a multiple of 32 last October to approximately 21, roughly where it stood when ChatGPT launched in November 2022, according to Truist.

Meanwhile, they observe that tech’s forward earnings growth remains by far the strongest in the market, with estimates rising approximately 20% over just the past three months.

“There are still risks and open questions around circular financing and the pace of new model development,” says Truist. “Yet, with tech’s relative valuation premium down to approximately 9%, near the lowest level of the past decade, the sector appears to be reflecting at least some of that uncertainty.”

This reset for technology makes the sector more attractive relative to the rest of the market, Truist thinks.

Source: Truist

Also likely to support stocks is news that the latest American Association of Individual Investors survey shows bearish sentiment at its highest level since May 2025, around the time of President Donald Trump’s tariff shock, and nearing highs more commonly associated with equity-market lows, according to Truist.

“At the same time, market breadth, while not quite washed out, is approaching those levels as weakness has broadened beneath the surface. The percentage of stocks above their 50-day moving average has declined to 30%; readings in the 20s are often considered oversold,” they say.

Truist notes risks to their positive view. History shows the stock market may be choppy in the first few months of a Fed rate-hiking cycle — though stocks were higher 12 months later in five of the six such cycles, with an average gain of 9%, they add.

Still, they note that: “The seasonal backdrop remains challenging, and macroeconomic uncertainty is elevated, while higher interest rates and oil prices could present a headwind for the economy and market valuations.”

If the S&P 500 were to return to the valuation reached during the 2025 tariff shock, the index would trade near 18 times forward earnings, implying a level around 7,200, Truist calculates. That’s an area reinforced by other support measures, including the 200-day moving average and the median historical pullback of roughly 7%.

Truist’s bottom line is that the weight of the evidence supports staying aligned with the longer-term market uptrend. “Underweight investors should consider adding equity exposure, with tech presenting a relative opportunity today. A deeper pullback would potentially provide an opportunity to become more aggressive.”