UBS reiterates Buy rating on Pepsico stock ahead of Q2 earnings
- The S&P 500 is melting up on AI euphoria and tariff delays—but how long can it last?
- Powell’s next move and August trade risks could decide whether this rally has legs.
- For now, buyers are in control—but even bulls know this calm won’t last forever.
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The S&P 500 remains firmly on the front foot, grinding higher on the back of a rally that kicked off in April. It’s been a mix of bullish tailwinds – from Trump postponing his latest tariff threat to Washington greenlighting a chunky tax-and-spend package that headlines his second-term ambitions. Add in some easing in Middle East tensions and a never-ending appetite for anything AI, and you’ve got the perfect cocktail for a melt-up. Nvidia’s been hitting new highs, dragging the whole AI complex with it, and investors are clearly still buying the hype.
But here’s the thing: we’re now entering territory where further upside might need more than just good vibes. With both the S&P 500 and Nasdaq 100 having notched fresh highs recently, some traders are starting to eye the exits – or at least a bit of a breather. Europe’s not sitting still either, with Germany’s DAX and the UK’s FTSE 100 also punching through record levels. Global equities are undeniably hot, but it’s getting harder to justify fresh entries without a new catalyst.
S&P 500 Technicals – Buyers Holding the Line
The trend is your friend – and right now, that trend is up. No real ambiguity there. Most desks aren’t even entertaining the short side unless we get a clear sign of a top. Yes, the RSI is over 70, so technically overbought. But momentum remains bullish, and so far, dip buyers are doing their job.
In terms of support, I am watching the 6,265 level closely – that’s where Wednesday’s rally took off. Below that, the 6,152–6,166 zone is now critical. These were former all-time highs back in December and February, and that area is now reinforced by the 21-day EMA and a rising trendline. If the index slips below this zone, then that’s your first major sign of weakness.
Break that, and 6,071 – the post-ceasefire breakout level – comes into focus, with 6,000 as the psychological backup. On the upside, we’re sailing in uncharted waters. The all-time high sits at 6,333, and beyond that, round numbers like 6,400 and 6,500 are natural magnets.
All Eyes on the Fed – Will Powell Blink?
Rate cut hopes are keeping equities buoyant, but Powell hasn’t caved to the pressure just yet. Trump wants cheaper money, but the Fed’s playing it cautious. They’re still worried that those higher tariffs could feed back into inflation. And inflation, according to Powell, is still too sticky to risk a premature pivot.
That said, traders are pricing in a September cut with growing confidence. According to CME’s FedWatch tool, there’s now a 78% chance the Fed cuts rates in September – a significant shift from just a few weeks ago. The July meeting? Not so likely. Odds of a move this month are sitting below 7%, especially after that stronger-than-expected jobs report last week.
Next (LON:NXT) week’s inflation data could shake things up. CPI, PPI, retail sales, and the University of Michigan’s sentiment surveys are all on deck. Until then, it’s the usual trickle of jobless claims and smaller data points keeping FX and equity traders busy.
Trade Risks – Calm Before the Storm?
Trade tensions haven’t gone away – they’re just waiting in the wings. The latest negotiation deadline passed without fireworks, but August 1 is shaping up to be a key risk event. Trump’s made it clear: no more delays. If talks don’t move, tariffs could be back on the menu.
That’s the wildcard. If the August deadline comes and goes with no progress, expect volatility to spike. Until then, this market feels like it’s walking a tightrope – still bullish, but nervously glancing at what’s around the corner.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.