S&P500: Stock Market Today Slides as Oil Spike Fuels Bearish Sentiment

Oil Up, Stocks Down Trade Returns as Inflation Fears Grip the Market

The oil up, stocks down trade is back on Thursday after yesterday’s brief reprieve. Shortly after the cash market opening, the major U.S. stock indexes are lower with the blue chip Dow Jones Industrial Average off by more than 600 points. The benchmark S&P 500 Index is down 0.5% and the tech-heavy Nasdaq Composite is off by 0.2%.

Higher Oil for Longer Kills the Rate Cut Narrative

U.S. WTI crude oil prices are testing their highest level since June 2025, raising inflationary risks, driving up Treasury yields and the chances of another Fed hold on a June rate cut. Investors have been banking on at least two rate cuts in 2026 and lower rates are what’s been keeping this bull market alive. Higher oil for longer is threatening that and today, traders are voting with their feet.

Oil and Stocks Usually Get Along — Not This Week

Under normal conditions, oil and stocks tend to move in the same direction. Higher oil prices can actually be bullish for stocks when it signals strong economic demand. Essentially, energy stocks go up, the economy looks healthy and stocks go up.

However, the correlation between the two has flipped to negative. The war between the U.S. and Iran has turned into a pure inflation play rather than a demand signal. This week’s strong gains in the oil market are not being generated by a booming global economy, but because of supply destruction fears.

The cycle the war has put us in is oil up, inflation fears up, Fed cuts off the table, earnings threatened and stocks down.

SPX Crosses Below Pivot at 6831.47 — Still in Sell the Rally Mode

The S&P 500 Index (SPX) is trading lower after crossing to the weak side of a pivot at 6831.47. It’s still under the 50-day moving average at 6904.93 so the price action is indicating we’re still in “sell the rally” mode.

The early price action indicates the pivot will determine the direction into the close on Thursday. A sustained move over 6831.47 will signal the return of buyers. If this generates enough upside momentum then look for a possible surge into the 50-day moving average. On the flip-side, a sustained move under the pivot will signal the presence of sellers, setting up the possibility of an extended break into the intermediate retracement zone at 6762.10 to 6705.42.

E-mini Watching the Same Catalyst with Key Pivot at 6813.00

Going into the mid-session, keep your eyes on the SPX pivot at 6831.47. Any meaningful weakness in crude oil could launch an intraday rally over this pivot. However, the market is likely to pull away to the downside if prices continue to climb.

The March E-mini S&P 500 Index has a similar pattern and the same catalyst. The key resistance zone to overcome is 6851.25 to 6882.50. The major support area is 6813.00 to 6758.75. It is the last potential support before the 200-day moving average comes into play at 6676.00.

More Information in our Economic Calendar.