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Story summary
- The S&P 500 faces potential corrections in 2026, with a 50% historical chance of a bear market.
- Prediction market traders price in a 39% probability of a significant decline, underestimating risk despite Wall Street's 15% earnings growth outlook.
- Midterm elections historically increase volatility, with median intra-year drops of 19% to 21%.
- Elevated valuations could pose challenges if companies fail to meet expectations, prompting cautious sentiment and cash reserves.
