S&P500: Oil Surge Overrides Nvidia Boost as Inflation Fears Hit US Stocks

Oil’s Sudden Rebound Clouds the Bullish AI Story

The S&P 500 Index (SPX) is flat after the open. Futures hit a record. The cash market did not confirm it. That is the first thing every trader should notice today.

Nvidia gave the Street everything it wanted before the bell. New processor. New platform. New revenue line. The premarket ran. Then Iran shut down talks with Washington and moved to close the Strait of Hormuz. West Texas Intermediate crude oil ripped above $90. Spot Brent crude oil pushed toward the mid-$90s. May’s 17% decline in crude started getting erased in one session. The Nasdaq slipped. The Dow pulled back. The S&P 500 went nowhere.

Strait of Hormuz Shuts Down the Open

Iranian state media reported negotiators halted communications with Washington. They are moving to close the Strait of Hormuz. That is the most important oil shipping route on the planet. West Texas Intermediate crude oil jumped above $90 a barrel. Spot Brent crude oil pushed toward the mid-$90s.

The market was set up for a clean open on the Nvidia news. Tehran wrecked it. One headline repriced the entire session. Oil above $90 puts inflation back on the table. The Federal Reserve is not cutting into rising energy costs. Traders who came in long on tech walked straight into a supply shock.

The Middle East is getting worse, not better. Netanyahu praised the capture of Beaufort Castle in southern Lebanon. Israeli troops are pushing deeper into Lebanese territory. Two Iranian ballistic missiles targeted U.S. personnel in Kuwait overnight. U.S. Central Command intercepted both. This is not a conflict that is winding down.

The region is escalating. Not de-escalating.

Nvidia Won the Premarket

Jensen Huang unveiled the N1X processor at Computex. Nvidia shares are higher. Dell and HP moved up on expectations they will build PCs with the new chip. Arm Holdings gained because its architecture is inside the N1X.

The losers told the other side. Intel dropped. Nvidia entering the PC processor market is a direct shot at Intel’s core business. Qualcomm and Advanced Micro Devices pulled back as traders repriced the competitive picture.

The Nvidia story is real. It is not strong enough to carry the broad market through a geopolitical shock that added $5 to a barrel of crude in one session.

Stocks in the News

Berkshire Hathaway is buying Taylor Morrison Home for approximately $6.8 billion and that was the biggest single-stock move of the day. Greg Abel called it a leading homebuilder. Berkshire traded slightly lower on the deal. In the restaurant space, Yum Brands is looking at selling Pizza Hut to focus on the brands that are actually growing.

Summit Therapeutics posted gains after a late-stage lung cancer trial in China showed a significant reduction in death risk. A global phase-three trial is running now.

Software carried the premarket. ServiceNow led the move. Workday, Adobe, and Salesforce followed. IBM surged after Barclays initiated with an overweight on quantum computing and Melius Research raised its target on top of that.

Bitcoin cracked below $73,000 for the first time since mid-April. Robinhood and Coinbase got sold with it.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index (SPX) is trading flat shortly after the cash market opening. The divergence from the futures market, which earlier reached a new record, should be noted. The inability to post a new record high early in the session, following bullish news from Nvidia and other tech stocks, also suggests a tired market. But without a clear topping signal on the chart, that information is mostly anecdotal.

I think I’ve been clear the past month that there is no resistance at record highs so the chart pattern will have to be your indicator. The best indicator today of a top will be a trade through 7599.38 and then a lower close. This won’t indicate a change in trend, but it could be a sign that the selling is greater than the buying at current price levels.

The current main range is 7333.68 to 7599.38. Its 50% to 61.8% zone at 7466.53 to 7435.18 is the first downside target. Since the main trend is up, buyers are likely to come in on the first test of this area.

A failure to hold 7435.18 will be a sign of weakness and could trigger an acceleration to the downside with 7333.68 the major target.

What to Watch

Futures hit a record. Cash could not follow. That gap is the story. Oil above $90 is doing the damage. The Strait of Hormuz headline is live and it is not going away tonight.

Nvidia gave the market a real catalyst. It does not matter. A chip launch cannot overpower a supply route closure that just repriced energy costs globally. Crude stays bid. Inflation fears stay on. Equities stay capped.

A trade through 7599.38 followed by a lower close is the first signal sellers have taken over. Support at 7466.53 to 7435.18 is the first target. Main trend is still up. Buyers show up on the first test. Lose 7435.18 and 7333.68 comes fast.

More Information in our Economic Calendar.