Indices News

The S&P 500 had a wild Thursday. After almost hitting 7,000 points, the index fell sharply to a weekly low of 6,870.8 before recovering to close at 6,967.41, a slight 0.1% drop. Let's look at what happened and what it could mean for the rest of the year. What Triggered the Midday Dip? The catalyst for yesterday's decline was largely tied to Big Tech's post-earnings fallout. Microsoft's stock fell almost 10%, the worst day since March 2020 after its latest earnings report revealed lower cloud growth, and the company’s weak margin guidance. This dragged down other software companies like Salesforce and ServiceNow, which also saw big drops. The Federal Reserve's decision to keep rates steady at 3.5-3.75% also contributed. Chairman Jerome Powell's comments about ongoing inflation didn't give much hope for rate cuts soon. Some might see this as an overreaction in an expensive market. The S&P 500 index has risen 40% since mid-2024, so many investors are ready to take profits at any chance. Is This the Start of a Reversal? While it's too early to say for sure, Thursday's drop is a warning. The 1.5% drop during the day felt big, but the quick comeback shows that many investors are still ready to buy the dip. Meta Platforms helped by rising almost 10% because its earnings showed that investments in AI are paying off. What it Means for the Rest of 2026 Charles Schwab points out that inflation is close to 3% but remains unstable due to high tariffs and a strong services sector. This could limit the Fed to just two rate cuts this year. Goldman Sachs is still optimistic, predicting a 12% rise to around 7,800, driven by GDP growth and AI. On the other hand, Morgan Stanley is worried about political risks like tariffs and debates about the Fed's independence. J.P. Morgan also notes that trade wars and international tensions could hold back gains. Plus, Charles Schwab says that uncertainty around midterm elections often puts pressure on stocks. If the index holds its ground, this dip might be a good buying opportunity. If not, it could signal a bigger correction. S&P 500 Forecast The S&P 500 shows less upward momentum after Thursday's drop, trading near 6,969 with the first support around 6,945 and the second one at 6,924, corresponding to the middle Bollinger Band. If it stays above 6,900, the MACD suggests it could keep going up. There's immediate resistance at the previous session's highs of 6,993, beyond which it could go to the psychological 7,000. If it manages to flip that mark into a support, the Index could go in to test 7,020. S&P 500 Index on the daily chart with key resistance and support levels for January 30, 2026. Created on TradingView What caused the S&P 500's drop yesterday? Microsoft's 10% plunge after weak cloud growth and margin guidance and the Fed's steady rates amid inflation concerns, triggered the decline. What is the biggest risk to the stock market for the rest of 2026? Persistent inflation is the main risk. If prices stay high, the Fed might not cut rates as much as expected, hurting stock values. Does this signal a reversal for the index? A reversal is possible, but it could be temporary if the index holds its supports. Analysts see a possible rebound thanks to AI, but risks remain.