S&P 500 Forecast: Tech rebound brings calm after bank-led wobble

US index futures rebounded overnight, helped largely by a resurgence in technology stocks. Yesterday’s pullback, driven by disappointing bank earnings, briefly unsettled sentiment. However, a strong set of results from Taiwan Semiconductor Manufacturing Company (TSMC) quickly shifted the mood, reminding markets that enthusiasm around artificial intelligence and long-term growth themes remains very much alive. Futures on S&P 500 (+0.5%) and Nasdaq 100 (+1%) climbed as TSMC outlined ambitious plans to lift capital expenditure by at least 25%, potentially pushing spending towards $56 billion in 2026. Just as importantly, the chipmaker signalled revenue growth that exceeded expectations. That reassurance spilled into European markets too, with the Stoxx 600 hitting fresh record highs as chip-equipment names led the charge. As things stand therefore, the underlying bullish S&P 500 forecast and trend remains intact.

 

Tech regains leadership

 

Technology stocks had looked vulnerable in recent weeks as investors rotated away from mega-cap names and into more cyclical areas of the market. TSMC’s update, though, appears to have stabilised that rotation rather than reversed it outright. Names tied to the semiconductor supply chain, including ASML, Applied Materials and Lam Research, were among the strongest performers, underlining how sensitive the market remains to signals around AI investment.

 

The broader takeaway here is that while leadership within the index may continue to shift, there is still plenty of appetite for growth exposure. For the S&P 500 forecast, that balance between tech optimism and broader participation is likely to remain a defining feature in the weeks ahead.

 

 

Bitcoin rebounds, oil drops and metals all over the place

 

Beyond equities, risk appetite was also evident elsewhere. Bitcoin hovered near a two-month high, while the US dollar traded in a relatively narrow range. The yen remained under pressure despite renewed talk of potential intervention, suggesting markets remain unconvinced that policymakers are ready to act decisively just yet. Precious metals, meanwhile, continued to display elevated volatility. Silver, which had been down as much as 7% overnight, managed an impressive rebound, trimming losses to around 2% at the time of writing. Crude oil moved in the opposite direction, slipping for the first time in six sessions. Comments from President Donald Trump hinting at a possible delay to any US military involvement in Iran eased geopolitical risk premiums, at least for now.

 

Also worth watching is the banking sector

 

Bank stocks remain a clear area to watch. Yesterday’s decline on Wall Street was led by the financial sector after a mixed start to fourth-quarter earnings season. Wells Fargo and Citigroup both disappointed, with Citi reporting a notable drop in quarterly profits despite modest revenue growth. JPMorgan had already dampened expectations earlier in the week, pointing to weaker investment banking revenues and higher provisions for potential loan losses. Adding to the pressure is renewed political scrutiny, after Trump floated the idea of capping credit card interest rates at 10%. That proposal comes after a stellar year for US banks in 2025, during which the sector added roughly $600 billion in market value. Against that backdrop, the recent weakness may ultimately prove to be a corrective pause rather than the start of a deeper trend, particularly for institutions with solid balance sheets.

 

Technical S&P 500 forecast: Key levels to watch

 

 

The overall technical setup remains constructive for the S&P 500 forecast. After nearly pushing up to the 7,000 level, our US S&P 500 index, derived from the underlying S&P 500 futures, eased back as traders locked in profits around this psychologically important area. Crucially, the pullback has been orderly. The index has not broken down decisively, suggesting the broader bullish trend is still intact.

 

Support around 6,895 has held so far. Below that, a more significant zone near 6,766/79 area will come into focus next. A clear break below that level would likely see volatility pick up. On the upside, a convincing move through 7,000 would reopen the door to fresh highs, with little obvious resistance beyond. In that scenario, the next upside targets could be those Fibonacci extension levels shown on the chart. For now, momentum may have slowed, but the absence of clear bearish signals keeps the underlying outlook tilted to the upside.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R