S&P 500 Index: Breaks 7,000 Today – Tech Stocks Face Fed and Earnings Test

S&P 500 Pierces 7,000 for the First Time — But Can It Hold?

The major U.S. stock indexes are trading mixed but mostly lower, with the blue-chip Dow the only one in the green on Wednesday at mid-session. The benchmark S&P 500 poked through the 7,000-point mark for the first time shortly after the cash market opening.

Its six-day rally, driven by relentless optimism over artificial intelligence and expectations of strong Mega Tech earnings as well as a more dovish future outlook from the Federal Reserve as it considers the timing of its next rate cut, was responsible for the earlier surge. However, shortly after that move, traders took profits as they began squaring positions ahead of the Fed.

At 17:00 GMT, the Dow Jones Industrial Average is trading 49,022.70, up 19.29 or +0.04%. The S&P 500 Index is at 6,972.18, down 6.42 or -0.09%, and the Nasdaq Composite is trading 23,802.43, down 14.67 or -0.06%.

“You could definitely have a continuation of the rally in equities if the earnings season shows that AI expenditure is bringing in revenues,” said Jeff Leschen, managing director at Bramshill Investments. “Expected rate cuts by the Fed could also be a tailwind,” he added.

Energy Leads, Health Care Lags

The top sector of the session is Energy, driven by a two-day jump in crude oil. The Health Care sector continued to weaken with a 0.81% drop.

AI Hype and Chip Stocks Drive the Rally

AI-linked optimism and chip companies have been two of the key drivers of U.S. markets, pushing tech giants including Nvidia (+1.18%), Microsoft (+0.65%), and Texas Instruments (+9.21%) higher. The mega technology stocks account for nearly 50% of the S&P 500, so they have an outsized influence on its overall performance.

Expectations of interest rate cuts by the U.S. Federal Reserve have also underpinned risk appetite since the last cut in December, with traders betting on two 25-basis-point reductions in 2026, with the first perhaps in June. The Fed lowered interest rates three times in 2025.

Fed Decision Looms

The Fed is, however, widely expected to hold interest rates when it announces its decision later in the day at 19:00 GMT.

The indexes have bounced back to record-high territory following bouts of geopolitical pressure earlier this month on worries related to U.S.–NATO friction over Greenland, Trump tariff policy uncertainty, and pressure over the U.S. central bank’s independence.

Earnings Expectations Remain Strong

A consensus of analysts expects profit for S&P 500 companies to increase 15.5% in 2026, an improvement from a 13.2% growth forecast for 2025, according to data compiled by LSEG.

Tech earnings, powered by AI’s speculative boom, are largely expected to drive U.S. corporate growth in the fourth quarter, with the sector’s profit projected to rise about 27%, compared with an estimate of a 9.2% increase overall for S&P 500 companies, according to LSEG data.

LSEG data also showed that revenue growth from the tech sector in the fourth quarter was pegged at about 18%, compared with the estimate of a 7.3% rise for the S&P 500.

The S&P 500 has rebounded nearly 45% from its lows in April 2025, when U.S. President Donald Trump’s tariffs rattled global markets and the “sell America” campaign was introduced.

Short-Term Outlook: Fed and Mega Tech Earnings in Focus

Today’s price action suggests a little nervousness ahead of the Fed and the post-close earnings reports from Microsoft, Tesla, and Meta. The S&P 500 Index showed strength when buyers took out 6,986.33 but will look powerful if it can overtake its main uptrend line.

More Information in our Economic Calendar.