What Happened in the Markets Last Week
S&P 500 Extends Win Streak to Eight Weeks
The S&P 500 gained 0.9% for the week, marking its eighth consecutive weekly advance and longest winning streak since late 2023. The Dow rose 2.1% while the Nasdaq added 0.5%, with all major indices showing strong momentum.
Healthcare Stocks Post Best Week in Months
The S&P 500 healthcare sector climbed 3.4% for its strongest weekly performance in over six months. Merck led gains with a 3% rise after positive lung cancer treatment trial results, while semiconductor stocks also surged on renewed AI enthusiasm.
Treasury Yields Hit Multi-Year Highs on Inflation
The 10-year Treasury yield surged above 4.60% to reach its highest level in a year. The 30-year bond yield hit a nearly 19-year high as Middle East conflict-driven inflation pressures weighed on bond markets.
Kevin Warsh Sworn in as New Fed Chair
Kevin Warsh was officially sworn in as Federal Reserve Chairman on Friday, replacing Jerome Powell. The leadership change comes as the Fed faces rising inflation pressures from geopolitical conflicts and surging oil prices.
Nvidia Beats Estimates Despite Stock Decline
Nvidia reported sales of $81.6 billion, beating the $78.9 billion consensus, with net income of $58.3 billion surpassing analyst expectations. Despite the strong results, shares fell 0.9% as investors had hoped for even stronger performance from the AI chipmaker.
S&P 500 Weekly Outlook
The S&P 500 enters the holiday-shortened week at 7,517 after touching fresh all-time highs on May 14th, riding a 27.94% year-to-date gain. With Memorial Day Monday reducing trading volume, focus shifts to evolving Fed expectations and geopolitical tensions affecting Treasury yields, which have climbed to 4.62% amid Iran nuclear deal uncertainties.
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Bull Case: What Could Drive the S&P 500 Higher
💪 Earnings Resilience
Corporate fundamentals continue supporting elevated valuations even as the market trades near historical peaks. The 27.94% YTD performance reflects underlying earnings strength that has weathered multiple Fed policy pivots.
🎯 Fed Pause Benefits
The 3.50%-3.75% fed funds rate appears stable through year-end with markets pricing only 40% odds of December tightening. Policy certainty reduces a key overhang that has pressured growth stocks in prior cycles.
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Bear Case: Risks That Could Weigh on the S&P 500
🛢️ Iran Tensions Spike Yields
Treasury yields surged to 4.62% as Iran’s Supreme Leader hardened positions on uranium exports, threatening nuclear deal progress. Rising yields create headwinds for equity valuations, particularly growth sectors trading at premium multiples.
🗳️ Fed Discord Emerges
The recent 8-4 FOMC vote marked the first four-member dissent since 1992, with Governor Miran pushing for cuts while others resist dovish language. This internal division creates policy uncertainty that could unsettle markets expecting stable guidance.
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Key Market Markers
🎯 Resistance at 7,600
Elliott Wave analysis identifies key resistance around 7,600 based on technical projections. A clean break above this level opens the door to the 7,900 upside target.
📈 10-Year at 4.62%
The benchmark 10-year Treasury yield’s move to 4.62% represents a critical level for equity risk premiums. Sustained moves above 4.70% historically pressure P/E compression across major indices.
🏦 December Rate Watch
Markets price 40% odds of a 25bp hike in December despite the current pause. Any shift in Fed communications or economic data could rapidly reprice these expectations.
🌍 Geopolitical Premium
Iran nuclear negotiations remain fluid with oil markets reflecting supply disruption risks. Any escalation or deal breakdown could trigger broader risk-off sentiment beyond energy sectors.
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Bottom Line
The S&P 500 sits at a technical crossroads near 7,517, with momentum indicators showing both strength and warning signs. While moving averages support further gains toward 7,600-7,900, RSI divergence and elevated Treasury yields create meaningful headwinds. The holiday-shortened week reduces liquidity, potentially amplifying any moves around key support at 7,000 or resistance at 7,600. Geopolitical developments and Fed communication shifts represent the primary wildcards capable of breaking the current consolidation pattern.
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