Here are the odds of bear markets in each stock index this summer

• A 20% decline in the S&P 500 from its high of 7,610 would bring it to 6,088, with options pricing a 10.5% chance of closing at that level by August 31 (roughly 21% chance of touching that price)
• The Nasdaq faces higher bear market odds at 32% due to elevated implied volatility of 33 versus 22 in the S&P 500, driven by selling in big-tech AI winners and FOMO selling for SpaceX liquidity
• The last technical bear market in the S&P 500 occurred during the 10-month downturn in 2022 amid rising interest rates, with a 21% intraday decline in 2025 during tariff-related selling

Market Summary: Bear Market Probabilities for Summer 2026

Key Developments

U.S. stocks declined Wednesday as concentrated selling in technology stocks, particularly AI-related names, pressured major indexes despite early rally attempts. Market participants are now assessing the probability of bear markets across different indexes through August 31, 2026.

Bear Market Probabilities

According to options market data from ThinkOrSwim:

• S&P 500: 10.5% chance of closing at bear market levels (down 20% from the peak of 7,610 to 6,088); approximately 21% probability of touching that level
• Nasdaq: 32% chance of entering bear market territory
• Small-cap stocks: 24% odds of losing at least 20% by August 31

Volatility Analysis

Implied volatility metrics reveal significant divergence:

• Nasdaq 100: 33 (elevated)
• S&P 500: 22
• Russell 2000: 29 (30-day implied volatility)

Scott Bauer, CEO of Prosper Trading Academy, suggests the Nasdaq probability appears high while S&P 500 seems low from a volatility perspective. He recommends selling Nasdaq volatility and buying S&P volatility, noting that "FOMO selling" related to SpaceX capital raising is exacerbating individual stock volatility in tech-heavy indexes.

Historical Context

The last technical bear market in the S&P 500 occurred during the 10-month downturn in 2022 amid rising interest rates. In 2025, the index experienced an intraday decline exceeding 21% during tariff-related volatility.

Market Implications

The concentrated selling pressure in big-tech AI winners is creating wider volatility spreads between indexes, suggesting heightened risk of sharper moves in the tech-heavy Nasdaq compared to broader market indexes.