S&P 500, Nasdaq, Russell 2000 Forecast for Next Week

Well, it finally happened. The S&P 500 hit the psychological level at 7k on Wednesday morning, ahead of the FOMC rate decision. There was a quick tweet from President Trump to commemorate the event and then, well, nothing. Price began to pullback and it looked like there would be larger pullback on Thursday, but bulls responded in a big way and then on Friday, we again saw a sizable pullback that pared back into the close.

At this point there’s clear fatigue in the indices but there’s also little reason to get bearish, in my opinion, as the President continues to pump markets and the Fed appears to have little willingness to stand in the way. If we do get a strong inflation print perhaps that brings a pullback, but at this point it feels there’s little expectation that this could deter the Fed from rate cuts later in the year and that’s been an overriding factor to continued gains in stocks.

S&P 500 Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Small Caps Shifting the Narrative

With that said, the S&P 500 hasn’t been the most attractive bullish backdrop so far this year amongst US indices, as that crown goes to the Russell 2000, and given the onset of fiscal policy initiatives from the Big Beautiful Bill, along with the expectation for Trump to continue to pump markets ahead of mid-terms later in the year, a broadening of the rally can remain as an attractive topic.

Last week saw some change on that front as the Russell 2000 pulled back following a doji the week before, just after a fresh ATH. This also sets the stage for some possible support at the 2560 level or perhaps the 2460 level that was resistance for about four years until finally yielding to breakout in late 2025 trade.

Russell 2000 Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

The Nasdaq has been a big push point with the equity recovery from last April’s lows but of late it’s started to lag. Case in point, the S&P 500 hit a fresh ATH last week with the 7k test in SPX and the Russell 2000 set a fresh all-time-high the week before. In the Nasdaq, we haven’t seen a fresh ATH since October 29^th which was the Fed’s second rate cut of last year, and since then, the tech-heavy index has begun to diverge a bit.

This puts perhaps even more importance on tech earnings in the coming weeks but I’d still hesitate to get too bearish here, at least until evidence presents that sellers are willing to take a larger role. The 25k level was support in Nasdaq futures in the prior week so there was still a visceral response from buyers on pullback setups. If we do get a daily close below that psychological level, that can begin to shift, although I’d approach that theme carefully until there’s more reason to think that wide-scale profit taking is setting up for a larger takeover.

Nasdaq 100 Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro