- S&P 500 forecast remains centred on whether seasonal momentum can overcome fresh AI jitters
- Oracle’s miss rattles tech confidence just a day after a dovish Fed lift
- Bond yields and next week’s jobs report now stand in the spotlight
If you’re watching the markets today, the big question shaping the S&P 500 forecast is whether investors can regain their footing after a surprisingly shaky start. A softer tone from the Fed had only just boosted sentiment, and Powell’s calm delivery at yesterday’s presser helped soothe nerves. But that optimism didn’t last long. Oracle dropped a cold splash of reality on the AI-trade frenzy, reminding markets that not all AI-related spending is a guaranteed home run. With the calendar pretty light for the rest of the week, traders are already looking ahead to next Tuesday’s US jobs report and a barrage of central-bank decisions. The big question now is this: can we still squeeze out that seasonal year-end push, or will AI hesitation spoil the Santa Rally?
Tech stumbles on Oracle earnings
S&P 500 futures slipped around 1% overnight before clawing back more than half of those losses as Europe opened. The Nasdaq 100 felt the brunt of the pressure, with tech names stumbling after Oracle plunged over 10% in premarket. Missing cloud-revenue expectations was enough to spark fresh concern about whether AI infrastructure spending is actually translating into results. Nvidia followed Oracle lower, and even Bitcoin cooled off, testing the $90,000 level.
In short, one earnings update was enough to chill the very sector that’s powered much of 2025’s equity rally. But have markets over-reacted, or this is a sign of things to come?
AI valuations in focus again
Oracle’s report essentially revived the same valuation worries that rattled markets in November. Traders know that AI has been doing much of the heavy lifting for the S&P 500’s 2025 gains. So, any hint that spending may not pay off immediately can quickly dampen risk appetite, as we have again seen today. But it’s too early to say we’re headed for another bout of November-style volatility, although it’s definitely something traders will want to keep on their radar. And if Broadcom’s earnings later today disappoint as well, the mood across tech could sour even further.
Watch bond yields closely
Whether equities can pick up again will depend in part on Treasurys. Rising yields typically spell trouble for high-growth tech names. Before Oracle’s hit, investors had been encouraged by the Fed keeping the door open for more easing and by fresh bill purchases aimed at rebuilding bank reserves. That combination pushed yields lower, providing a relief for risk assets yesterday. So far yields have stayed low and the if they remain contained, stock bulls will be happy. But if they turn higher again, the tech sector could face more pressure.
Technical S&P 500 forecast and levels to watch
The S&P 500 forecast is still bullish from a technical standpoint, although the struggles over the past several days make you wonder whether the rally is running out of juice just as the holidays approach. The key support zone sits between 6766 and 6778 on our US SP 500 chart, which is derived from the underlying S&P 500 futures. This area has served as previous resistance and as long as the index holds above this pocket, the bulls have reason to stay confident.
A clean break below it, however, could attract sellers and open the door to 6715 first, followed by 6700 and potentially 6600 if downside momentum builds.
On the upside, 6877-6900 area is the key line in the sand for the lack of a better word. It’s rejected the bullish advance several times, so a firm close above this zone would effectively end the multi-day consolidation. In that scenario, the probability of taking out the October high at 6922 and potentially climbing to 7,000 mark rises significantly.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
