S&P 500 Reversion to Mean Could Send Index to 2,500: Analyst

Lance Roberts warns that the S&P 500 could fall from 7,000 to 2,500 if it reverts to its long-term trend. The index is currently 12.08% above its YTD average and 16.22% above the trailing year average. Roberts cites Ned Davis Research data showing the market is more extended above its long-term logarithmic trend than in 2000. Retirees face sequence-of-returns risk at current valuations, while 10-year Treasuries offer a competing alternative to equity exposure. A valuation reset in megacaps like NVIDIA, Apple, and Microsoft could drag the entire index down.