S&P500: Forecast Turns Cautious as Oil and Yields Hit US Stocks Today

Oil and Yields Trigger Pullback

The S&P 500 Index pulled back Wednesday, one day after posting a record high at 7620.90. The Dow Jones Industrial Average fell more than 385 points and the Nasdaq Composite also moved lower. West Texas Intermediate crude oil climbed near $96 a barrel while the 10-Year Treasury yield pushed toward 4.5%. Record high on Tuesday. Selling on Wednesday. Oil and yields flipped the market in one session.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index is under pressure on Wednesday, just one day after reaching another record high at 7620.90. The main trend is up according to the daily swing chart. A trade through 7620.90 will reaffirm the uptrend. Taking out 7333.68 will change the main trend to down.

The main range is 7333.68 to 7620.90. The primary downside target is its retracement zone at 7477.29 to 7441.40.

The nearest minor bottom is 7562.61. A trade through this level will shift momentum to the downside. Another minor bottom is 7499.72.

As we hit mid-week, I don’t think it’s too early to start monitoring the market’s weekly performance. Although the SPX hit a new record high, it’s barely higher for the week. This puts it in a position to form a potentially bearish closing price reversal top.

Last Friday’s close was 7580.05. Keep an eye on trader reaction to this level into Friday’s close. Falling below it could bring in the sellers.

Oil Near $96 Fuels Inflation Pressure

West Texas Intermediate crude oil gained about 2% to around $96 a barrel on Wednesday. Spot Brent crude oil rose roughly 2% near $98. U.S. and Iranian forces exchanged strikes overnight. Kuwait’s air defense systems intercepted hostile targets. The conflict is spreading.

The Strait of Hormuz is the risk that keeps this trade alive. Roughly one-fifth of global oil exports move through that waterway. JPMorgan says it could reopen later this month as declining inventories build pressure. But until it does, crude oil prices stay elevated and the inflation story stays alive with them.

The bond market is paying attention. The 10-Year Treasury yield pushed toward 4.5% while the 30-Year Treasury yield moved closer to 5%. Stocks have handled higher yields for much of the rally. Crude oil near $96 and yields moving higher at the same time is a different story.

Strong Jobs Data Pushes Yields Higher

ADP reported private employers added 122,000 jobs in May. That topped expectations and marked the strongest hiring month since January 2025. Treasury yields moved higher immediately after the release as traders continued to push back expectations for Federal Reserve rate cuts.

The labor market keeps refusing to crack. Traders looking for signs of slowing hiring did not get them Wednesday. Instead, they got another report showing employers are still adding workers despite high interest rates and elevated borrowing costs.

Cleveland Federal Reserve President Beth Hammack added to the pressure. She said rate hikes remain possible if inflation fails to cooperate and pointed directly at energy costs as a risk. Crude oil is already trading near $96 a barrel. The bond market saw the combination of stronger jobs and higher oil prices and pushed the 10-Year Treasury yield toward 4.5%.

Private Equity and Software Feel the Pressure

Blackstone, KKR and Blue Owl Capital all fell Wednesday. The selling started after Partners Group capped withdrawals from one of its private equity funds. That was enough to pressure the entire group.

Software stocks were not getting much love either. Palo Alto Networks beat earnings estimates, beat revenue estimates and raised guidance. The stock still fell. GitLab dropped after issuing weaker guidance and announcing workforce reductions.

Ulta Beauty ran into the same problem. The company beat estimates and raised guidance. The stock still went lower.

That was the tell.

Good numbers were not enough Wednesday. The market wanted more and sellers stayed aggressive when they didn’t get it.

AI Hardware Continues to Lead

Marvell Technology extended its rally after Tuesday’s record move. Buyers continue to favor the AI hardware trade and the semiconductor sector remains one of the strongest areas of the market.

The split inside technology is getting harder to miss. Chipmakers and data center plays continue attracting money. Software stocks are getting a much different reaction.

Several consumer stocks held up better. Macy’s raised its full-year outlook after a revenue beat. GameStop rallied after stronger-than-expected earnings. Ollie’s Bargain Outlet lifted its profit forecast. Yum Brands gained after an analyst upgrade.

The market was lower Wednesday, but buyers were still showing up where they wanted to be.

What to Watch

The market has two problems right now and neither one is getting better.

West Texas Intermediate crude oil is trading near $96 a barrel and the 10-Year Treasury yield is approaching 4.5%. The Strait of Hormuz remains unresolved and stronger economic data is keeping pressure on the rate-cut story. The bulls need one of those stories to cool off. So far they are getting neither.

The technical setup is becoming more interesting too. The S&P 500 hit a record high at 7620.90 but is barely positive for the week. Last Friday’s close at 7580.05 is now the level to watch. A close below it on Friday forms a closing price reversal top and could bring in additional sellers.

The first support zone remains 7477.29 to 7441.40. The trend is still up and buyers are expected on the first test of that area.

For now, the bulls have the trend. The bears have oil, yields and a Federal Reserve that is still talking tough.

More Information in our Economic Calendar.