Companies are earning solidly, macro data are relatively stable, while oil prices are dropping. Those were major reasons for US equity indexes to reach new all time highest levels. The S&P 500 continues to win further starting with May, reaching a fresh new all time highest level on Friday, at 7,4K. However, this does not mean that risks are completely off. Inflation fears are still on, as crude oil is hovering near $100 level amid ongoing uncertainty surrounding US - Iran negotiations and tensions in the Middle East.
Technology and AI-linked companies continued to dominate market leadership within the S&P 500. Shares of Nvidia, Microsoft and Meta Platforms remained resilient, helping limit broader downside pressure despite weakness across several cyclical sectors. Semiconductor stocks initially rallied on AI optimism before profit-taking hit names such as AMD.
Investor sentiment was also shaped by macroeconomic data. A stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve could keep interest rates elevated for longer, while softer wage growth helped ease some inflation concerns. Markets are now increasingly focused on upcoming inflation data next week, as traders assess whether rising oil prices could reignite broader price pressures.
Within the S&P 500, earnings remained broadly supportive. AI infrastructure, cybersecurity and cloud-related companies outperformed after upbeat quarterly results and higher guidance, while some industrial and consumer-facing names lagged on concerns over higher input costs and slowing demand.
Analysts are noting that the S&P could continue its current rally. However, at one moment the profit-taking will take place, when a short reversal might be expected. Also, geopolitical and inflation risks are still in place, which also might be a future trigger for a short correction. For the moment, the S&P 500 remains in the highly overbought zone for the last three weeks.
Technology and AI-linked companies continued to dominate market leadership within the S&P 500. Shares of Nvidia, Microsoft and Meta Platforms remained resilient, helping limit broader downside pressure despite weakness across several cyclical sectors. Semiconductor stocks initially rallied on AI optimism before profit-taking hit names such as AMD.
Investor sentiment was also shaped by macroeconomic data. A stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve could keep interest rates elevated for longer, while softer wage growth helped ease some inflation concerns. Markets are now increasingly focused on upcoming inflation data next week, as traders assess whether rising oil prices could reignite broader price pressures.
Within the S&P 500, earnings remained broadly supportive. AI infrastructure, cybersecurity and cloud-related companies outperformed after upbeat quarterly results and higher guidance, while some industrial and consumer-facing names lagged on concerns over higher input costs and slowing demand.
Analysts are noting that the S&P could continue its current rally. However, at one moment the profit-taking will take place, when a short reversal might be expected. Also, geopolitical and inflation risks are still in place, which also might be a future trigger for a short correction. For the moment, the S&P 500 remains in the highly overbought zone for the last three weeks.
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