Economists at Swiss-based Pictet Wealth Management predict that the current growth scare will not develop into an economic recession, and that an economic recession is the most likely factor to trigger a long-term decline in the stock market from a tactical pullback. However, while the long-term outlook for the stock market seems promising, the firm expects that the current uncertainty and high volatility will persist for some time, with a good entry point expected in late summer. Graham Secker, head of stock strategies at Pictet Wealth Management, stated that the recent pullback in the stock market is not particularly unusual, but given the low volatility in the previous period, market reaction to the decline has been more intense. There could be various reasons triggering the pullback in the stock market, but it is unlikely to end until a "growth scare" emerges and leads to some level of investor capitulation. Pictet Wealth Management notes that although the S&P 500 index has dropped 8% from its high on July 16, their performance and valuation framework indicates that the risk-reward profile still leans towards the downside. If the S&P 500 index falls to around the 12-month average level (4900 points) and the 12-month forward price-earnings ratio multiple is closer to the 10-year average of 17.9 times, rather than the current 19.4 times, the firm would be more willing to increase holdings. The firm also states that after a 23% decline from its peak, the risk-reward profile for Japanese stocks has significantly improved, with valuation multiples at the lowest levels since the pandemic (the TOPIX index's 12-month forward price-earnings ratio is 11.8 times as of last Monday's close).