S&P 500 outlook: Stocks steady as traders digest tech earnings, Fed and US-China relations

US stock indices bounced off their earlier lows, after index futures had fallen along with European markets earlier on. Investors in the US were weighing a muddled mix of tech earnings, the Federal Reserve’s cautious tone, and renewed optimism over US–China relations. President Donald Trump described his meeting with Xi Jinping as “amazing”, with both sides agreeing to roll back certain export restrictions and trade barriers. Markets, however, had largely anticipated this, which explains the muted reaction. Still, the easing of one of the major geopolitical uncertainties should be a welcome sign for risk assets, supporting a positive S&P 500 outlook. Unless there’s a significant negative surprise from the remaining tech giants yet to report, equities could well have further room to climb.

 

More tech earnings on the way

 

A few of the major tech names released their earnings after the close yesterday, with more results due later today. Meta plunged more than 11% as investors worried about its hefty AI investments, while Alphabet jumped more than 5% thanks to robust growth in its cloud division. Microsoft, meanwhile, saw its shares slip 2% after results failed to impress. Amazon and Apple are next in line to report after today’s close, and their numbers could well set the tone for the sector heading into the final trading day of the week and month.

 

Analysis: Why I think stocks will likely remain supported

 

Sentiment has cooled slightly since global indices hit record highs on the back of AI enthusiasm, but improving trade prospects and hopes of looser central bank policy are helping keep markets on the front foot, and the downside limited for the time being.

 

For all of Powell’s cautious messaging, the Fed’s stance wasn’t exactly unexpected. A bit of hesitation from policymakers isn’t enough to derail what remains a solid uptrend in equities. Interestingly, markets barely flinched even as Powell struck a somewhat more hawkish note – a clear sign that the AI earnings narrative is what’s really propping up the S&P 500, rather than hopes of easier monetary policy.

 

Earnings may have been mixed so far in the tech space, but revenues remain resilient. With Apple and Amazon still to come, we’ll soon find out whether the tech-led rally still has legs – or if investors begin searching for a fresh catalyst.

 

Powell’s press conference also hinted at some discord within the Fed, which lifted the dollar as traders trimmed around 10 basis points from expected rate cuts. The greenback gained most against the low-yielding yen and Swiss franc. Stocks, meanwhile, quickly shook off their initial dip, even after Powell noted that a December rate cut was not a “foregone conclusion.”

 

Optimism grows over US–China relations

 

After months of tension, the Trump–Xi summit finally delivered what markets had been hoping for – an extension of the trade truce. Both sides came away with something tangible: a one-year freeze on new trade escalations and a pledge to reduce friction. That alone removes a key source of uncertainty for businesses and investors alike – undoubtedly a positive for the S&P 500 outlook and broader market.

 

Technical S&P 500 outlook: key levels and trade ideas

 

The S&P 500 remains firmly in a bullish trend, characterised by higher highs and higher lows, with only shallow and short-lived pullbacks – a classic sign of a strong uptrend. A genuine reversal would require a decisive break below key support levels and a confirmed topping formation, neither of which have materialised so far. With that in mind, buying on dips remains the preferred approach, even at these elevated levels.

 

 

Immediate support lies around 6800/6 area marking an intraday breakout level on our US SP 500 index, which is derived from the underlying S&P 500 futures chart. Below this area we have 6749 to 6766 – roughly aligning with the highs from earlier in the month and the 21-day exponential moving average. Below that, the next key level is around 6680.

 

On the upside, initial resistance is seen near 6911, where the index has consolidated over the past couple of sessions. A clear break above this zone could put the psychological 7,000 mark firmly in sight – and that’s likely where the index is heading next.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R