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S&P 500 Forecast: AI Stocks Lead Rebound as Fed Minutes and Yields Potentially Cap Breakout Hopes
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Key Points:
- AI and semiconductor strength is back to leading the S&P 500 with a rebound. Stocks like AMD, Intel, Micron, Nvidia, and broader tech participation helped push the Index higher.
- Fed minutes and elevated yields remain main risks, as a longer Fed hold and a US 10 year yield still above trend could cap upside.
- Technical confirmation is close, but not complete, with short term market breadth improving to 47% and the S&P 500 above the 50-SMA and 50–SMA on the Renko.
S&P 500 Heat Map Shows Chip-Led Risk Appetite
This seems a bit more than a relief rally, AMD is up 7.44%, Intel (+5.54%), Micron (+3.43%), and Nvidia (+1.99%), so the AI trade is still the main engine under the S&P 500 Index. Target’s 6.44% jump adds a nice consumer pocket, GE’s 5.83% move gives industrials a life, and financials are helping too, with Goldman Sachs up (+4.67%), Morgan Stanley (+4.02%), and Citi (+3.91%).
Fed Minutes Take Away Rate Cut Hopes
The Fed minutes look more hawkish than the bulls would like. Policymarkers are still split but the centre of gravity has shifted away from cuts to a longer hold. Some officials are even more open to hikes if the inflation stays sticky.
US 10-Year Yield Pulls Back But Stays Elevated
The US 10 Year yield is off the highs of 4.70%. Its RSI crossed under the overbought levels and the Z-Score SMA is trending lower. A change in short term trend would be the Supertrend flipping to negative. That would mean yields declining below 4.54%. Nonetheless, medium and long term trend indicators, the 50-SMA and 500-SMa, are both underneath the bricks. As such yields are expected to continue to trend higher in the medium term.
0.025-Brick US 10-Year Yield Renko Chart Shows Yields Easing To 4.575%, While Still Holding Above the 50-SMA And 500-SMA
S&P 500 Index Rebounds as Breadth Tries to Recover
What’s really good to see here is an improvement in marketbreadth. During today’s session 47% of S&P 500 stocks are above their 20-day moving average which is of the 35% lows. The crossover to 50% would be a bullish signal for the Index.
S&P 500 Index Daily Chart Shows The Index Bouncing Above Its 20-Day MA, While Only 47% Of Stocks Remain Above Their Own 20-Day MA
S&P 500 Renko Rebound Tests Supertrend Resistance
The S&P 500 Index rolled on that 50-SMA higher. It’s RSI crossed back above 50 while the Z-Score SMA is back to trending higher. All it needs to do now is break through the negative Supertrend and flip it. Then it’s clear to make all time highs. It’s been only a slight pullback on the Index.
20-Brick S&P 500 Renko Chart Shows Price Rebounding Above the 50-SMA and 500-SMA, with RSI Back Near 58 And Short-Term Resistance At 7,453
Support Levels: 7,240, 6,775
Resistance Levels: 7,450, 8,150
Medium Term Path: The short term pullback in the S&P 500 Index seems to be nearing an end. We would need some confirmation once short term market breadth gets back above 50%. Also the Supertrend would need to flip back to positive. Additionally we need to see a cooling in yields. Sharp moves in yields can dampen the upward trajectory of the S&P 500 Index.
About the Author
Cedric Thompsonauthor
Cedric Thompson, CMT, CFA, is an investment strategist with experience in asset management, corporate strategy, and multi-asset investing.
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