S&P 500: Holding firm, but momentum is fading
S&P 500: Holding firm, but momentum is fading
With the heavyweight earnings from big tech now behind us and tensions around the Strait of Hormuz still unresolved, the obvious question is whether the AI-driven rally can keep doing all the heavy lifting at these levels.
Over the past few sessions, the S&P 500 index has started to lose a bit of steam. It’s not rolling over by any means, but the push higher has stalled. Futures did tick up slightly after the latest round of tech earnings, and there’s been some support spilling over from Europe thanks to softer oil prices — but the index itself is clearly taking a breather.
That said, the consolidation we’re seeing is actually quite telling. Oil has surged sharply over the past week or so, and normally that sort of move — particularly with geopolitical risk still simmering — would rattle equities far more than it has. Instead, the S&P is holding its ground.
Oil remains the key swing factor here. As long as flows through Hormuz stay constrained, there’s every chance crude pushes higher again — and that feeds directly into inflation expectations.
Oil surge means no more rate cuts from Fed this year
What’s changed more meaningfully is the interest rate narrative.
Rising oil prices are clearly making policymakers uneasy, and we’re starting to see cracks within the Federal Reserve. The tone from the latest decision leaned more hawkish than markets were expecting. Any further rate cuts, for now, they’re effectively off the table.
Markets have rapidly repriced that outlook, with expectations for further easing now close to zero. In fact, there’s even tentative chatter creeping in about the next move potentially being a hike — although that feels a stretch unless inflation re-accelerates in a meaningful way.
At the same time, bond yields have been grinding higher, reinforcing the idea that the global easing cycle is largely done. For equities, that’s not exactly a supportive backdrop.
You can see the knock-on effects elsewhere too. Oil-importing economies are starting to feel the strain, with currencies like the euro under pressure, while the yen’s brief move beyond 160 against the dollar triggered verbal intervention from Tokyo, sending the USD/JPY some 300 pips lower.
So why isn’t the market falling?
Well, the AI trade remains strong, and earnings are growing in the sector. Following its results last night, Alphabet rose 7% in premarket trading. Here’s a list of top stock gainers today.
But strip out the tech sector — particularly anything linked to AI — and the macro picture doesn’t look especially friendly for equities. Higher yields, sticky inflation risks, and geopolitical uncertainty would normally weigh heavily on sentiment.
Yet the S&P 500 isn’t cracking. That resilience makes it difficult to argue for a bearish view right now. The market is effectively shrugging off bad news, which is often a sign that underlying demand — likely driven by institutional flows into tech — is still doing the heavy lifting.
Technical view: consolidation, not reversal
From a technical standpoint, the trend is still firmly intact — higher highs, higher lows, and moving averages all pointing upwards.
What has changed is the short-term price behaviour. Instead of extending the rally, the index has slipped into a period of consolidation, struggling to break convincingly into fresh record territory.
On the downside, 7043 stands out as the first meaningful level to watch — the previous breakout point. Just beneath that sits the 7000 mark, which carries obvious psychological weight.
That 7000–7043 zone is key. If we do see a deeper pullback, that’s the area bulls will need to defend.
Before that, 7135 is acting as a near-term pivot. It’s already been tested a couple of times and, so far, buyers have stepped in.
On the upside, we’re dealing with thinner air. 7200 is the first hurdle, followed by the recent high around 7223. Beyond that, it’s largely extension territory, with 7230 and then 7469 coming into view from a Fibonacci perspective.
Momentum indicators also tell part of the story. The RSI pushed into overbought territory not long ago, so this pause isn’t surprising. If anything, this sideways movement is helping to reset conditions.
Trader | Analyst | TradingCandles.com
e: Fawad.Razaqzada@TradingCandles.com
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