S&P 500: Stock Market Today Supported by Ceasefire Extension and Earnings

Stocks Push Higher as Ceasefire Extension Calms Near-Term Fear

The major U.S. stock indexes moved higher Wednesday after Trump extended the ceasefire with Iran and earnings season kept delivering. The S&P 500 gained 0.8%, the Nasdaq Composite climbed 1.3% and touched a fresh intraday record, and the Dow Jones Industrial Average rose 320 points or 0.7%. Two things working in the same direction at the same time is enough to keep buyers in control.

Technical Outlook

Technically, the S&P 500 Index (SPX) is in an uptrend, but struggling to reaffirm the move during three days of consolidation. A trade through 7147.52 will signal a resumption of the rally and another record high.

The price action is getting a little tight at the top. A failure to make a new high like the Nasdaq Composite did today will be a sign of selling pressure or buyers concerned over valuation. A trade through yesterday’s low at 7050.20 will make 7147.52 a new main top, which would signal that the selling pressure is getting stronger.

Other than the record high, there is visible resistance. Some traders are making projections, while others are monitoring overbought signals. In addition to the highest high, traders should also note that the highest close is 7126.05.

There is room to the downside should we see increased selling pressure late in the session today. The first downside target is the former main top at 7002.28. A test of this level could attract buyers, but it’s not the best support level. The best level to look for new buying is the short-term retracement zone at 6968.77 to 6926.59.

Traders should note that conditions could get a little volatile around the former main top because a test of this level will mean that those who bought the first breakout are now caught in a bull trap, which means they may panic a little.

I think we have the makings of another leg of the bull market, but conditions could shift quickly for short-term investors if 6926.59 fails as support. In that case, the correction would be a lot steeper and possibly lead to a drop to 6732.21. So despite the size and speed of the last rally, I don’t think we’re in a “set it and forget it” situation yet.

Ceasefire Extension Takes the Edge Off

Trump extended the ceasefire two more weeks and that was enough to get stocks moving. The stated reason was divisions inside Iran’s leadership and a need for more time to get a unified proposal together. That’s not a resolution. Traders know it. But it pushed the near-term escalation risk off the calendar and that’s all the market needed to add to positions.

Iran hasn’t committed to anything. There are real questions about whether talks move forward at all. The ceasefire extension is a delay, not a deal, and the price action is reflecting that. Equities are pushing toward records but nobody is throwing risk management out the window.

Iran Seizes Ships, Oil Responds

Iran’s navy seized two container ships in the Strait of Hormuz Wednesday and Spot Brent Crude Oil briefly pushed back above $100 a barrel on the news. That’s the market telling you exactly what it thinks of the ceasefire. Equities can rally on the extension and oil can rally on the ship seizures at the same time because they’re pricing two different things. Stocks are pricing reduced near-term conflict risk. Oil is pricing the reality on the water. Both can be right.

Earnings Keep Delivering

More than 80% of S&P 500 companies reporting so far have beaten expectations according to FactSet. Boeing added 5% after posting a smaller loss than the Street was looking for. GE Vernova jumped 12% on stronger revenue. I’ve seen earnings seasons like this before. When the numbers keep coming in hot traders stop asking whether the rally is justified and start asking how high it goes.

What to Watch

The setup is straightforward. Ceasefire holds and talks make progress, oil pulls back, inflation pressure eases and this market has room to extend. Ceasefire falls apart and Iran moves further into the Strait, oil makes another run and stocks run into a wall fast. Earnings are doing their part. Geopolitics decides whether that’s enough.

More Information in our Economic Calendar.