As of October 2026, equity investors have faced challenges this year but have seen rewards for taking risks. The Nasdaq-100 has risen 14.6%, while the S&P 500 is up 11.7%, indicating that broader indexes are not in corrections or bear markets. Despite this, the reality of bear markets and significant pullbacks remains a part of investing. Rather than attempting to time the market, savvy investors often view sell-offs as opportunities to build shopping lists or enhance existing positions that may be undervalued.
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The Vanguard Information Technology ETF (NYSEMKT: VGT) could be a notable rebound candidate following any potential market sell-off. With a value of $149 billion, it is the largest dedicated technology exchange-traded fund. Its recent performance demonstrates its resilience; the ETF experienced a brief decline following the onset of the war in Iran but quickly rebounded. Similarly, in July, a bear market hit the Philadelphia Semiconductor Index rapidly, marking one of the swiftest corrections since the tech bubble burst in 2026. As semiconductor companies make up 43.6% of VGT's holdings, their performance significantly influences the ETF.
Despite some volatility this year, VGT remains up 28%. While predicting the causes of future corrections or bear markets is challenging, factors such as the Federal Reserve's battle against inflation through increased interest rates could play a role. The Fed aims to balance cooling consumer costs while not undermining economic growth. If higher interest rates lead to a notable decline in broader equity indexes, VGT may initially suffer. However, as market participants adjust to the prospect of prolonged sluggish economic growth, growth stocks, including many within this ETF, may become increasingly attractive.