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Monday's tech-led rally suggests last week's AI sell-off was more positioning anxiety than the start of a correction. Today's US CPI report could decide whether the S&P 500 rebound has staying power.
The trading week has not been particularly favorable for risk appetite in the short term, and this is now becoming increasingly evident in the performance of the S&P 500. During today's session, the index is down nearly 4.2%, marking its largest intraday decline of 2026.
Markets had a wild overnight session, with futures initially plunging before staging a sharp reversal and turning decisively higher. Global equity markets also bounced back, alongside gold and silver, while the US dollar has weakened. Oil prices fell on hopes of a deal between the US and Iran, providing another boost to market sentiment. The key question is why have markets rebounded so strongly and, more importantly, whether the recovery can last, given the prior assumption that a blue sweep would have been net negative for stocks?
The trading week is coming to an end, and a phase of weakness remains evident across the S&P 500 in the short term. Recent price action reflects this dynamic, with SPX losing more than 2.00% over the last two trading sessions, bringing selling pressure back into focus.
And just like that, it is Friday again and the end of a volatile week. Today offers little on the macro calendar to change the prevailing narrative, leaving markets largely at the mercy of risk appetite, oil prices and the growing unease around the AI trade.
Recent trading sessions have done little to restore confidence in the equity market. Over the last four sessions, the S&P 500 has declined by nearly 1.00%, a move that highlights growing short-term weakness and keeps the index moving further away from its record-high territory.
US and global equity markets have extended Wednesday’s sell-off, with Wall Street opening lower after a weak handover from Asia and Europe. The deterioration in risk appetite has been spreading across global markets. The dollar was firmer, Treasury yields were holding onto yesterday’s gains, while gold, silver and bitcoin were all under pressure alongside equities and major currencies.
US equity index futures surrendered an earlier midday bounce in London, as investors struggled to look past an increasingly uncomfortable macro backdrop. Higher oil prices and rising government bond yields are combining to put renewed pressure on risk assets, while the absence of a clear catalyst for improvement makes it difficult to see why investors would materially increase equity exposure at current levels.
Recent trading sessions around SPX have failed to show a particularly strong sense of confidence for the equity index. Over the last four trading sessions, average price movements have barely reached 1.00%, a figure that remains below the fluctuations seen weeks ago, when daily moves above 1.5% were relatively common.
Risk appetite has been hurt today with global stocks, gold, bonds and bitcoin all falling. On the ascendency were the usual suspects: Oil and the US dollar amid further escalating tensions between the US and Iran. Stock investors are cementing hawkish Fed expectations to an extent that it is starting to hurt their appetite for risk. Also unnerving investors is the continued rise in global bond yields – which kind of goes hand in hand with oil prices.
The dollar surged across the board after the Fed Chair Kevin Warsh surprised with a hawkish-leaning speech at the Jackson Hole summit. All the bearish dollar bets that had been accumulated since last Friday on the back of data weakness and bond market troubles had to be squared and that triggered a short squeeze rally for the dollar. Gold and silver dropped, as a result, as too did bitcoin, while US indices were giving back earlier gains.
The major European indices and US index futures fell by mid-day in London. The pressure was once again exerted by familiar forced. Bond yields rebounded sharply and a renewed surge in oil prices weighed on sentiment.
US index futures were broadly flat by midday London, following a sharp decline in the previous session. That was before the US Treasury announced thar it was increasing buybacks of long-term debt. That announcement has just caused yields to take a dip, while stock futures and gold have rallied.
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