S&P 500: US Stock Market Forecast Holds Record High After Israel–Lebanon Ceasefire

Stocks Hit Record Highs as Ceasefire News Fuels the Rally

The S&P 500 and Nasdaq Composite hit new record highs at mid-session Thursday as ceasefire news pulled fear out of the market. The S&P 500 is up 0.4% and the Nasdaq added 0.5%. The Dow Jones Industrial Average gained about 100 points. This week alone the S&P 500 is up more than 3% and the Nasdaq over 5%. That’s not a grind higher. That’s a market releasing pressure that built up fast.

Technical Outlook

S&P 500 Index futures are in a strong uptrend with no resistance in sight. The market is also pulling further away from both its 50-day moving average at 6764.37 and 200-day moving average at 6679.17, making it vulnerable to a big correction after it finally tops.

We’re not going to try to pick a top because the upside momentum is too strong, but we will be watching for a closing price reversal top formation. This won’t signal a change in trend but may be designed to alleviate some of the excessive upside pressure.

If we don’t get the reversal top then we’ll likely treat a close under the previous top at 7002.28 as an early sign of weakness.

Ceasefire Drives the Move

President Trump confirmed discussions with leaders in Lebanon and Israel and announced a 10-day ceasefire between the two nations. The market read it as a potential step toward broader negotiations involving Iran. Trump also said the conflict could be nearing an end. That was enough. The Nasdaq is now on its longest winning streak since November 2021 and retail investors are chasing it.

Flow data from JPMorgan shows smaller investors re-entering the market after sitting out most of the rally. Participation jumped sharply, driven by buying in individual stocks rather than ETFs. Late-stage retail buying at record highs. That’s worth watching.

Economic Data Is Mixed

Regional Federal Reserve reports showed stronger business activity in April but also a rise in input costs. Inflation pressure is building even as the labor market holds up. Initial jobless claims fell to 207,000, below expectations. The consumer is still employed. The question is what they’re paying for everything.

Record Highs With a Caveat

Easing geopolitical tensions got equities to record territory. The next test is whether the fundamentals can hold them there. Rising input costs and the potential for slower growth are the risks worth watching as earnings season continues.

More Information in our Economic Calendar.