S&P500 Near-term direction hinge on mega-cap earnings US 500 (per 1.0)TRADENATION:US500TradeNationTwo months into the Iran conflict, markets are entering a quieter but still tense phase, with no clear resolution in sight. Reports suggest the US is sceptical of Iran’s proposal to reopen the Strait of Hormuz without broader nuclear concessions, and a counteroffer may follow. With the strait effectively still closed, oil remains the dominant macro driver. Brent crude has pushed back above $100/bbl for nearly a week, rising to around $109/bbl, which is feeding directly into renewed inflation concerns. This is showing up in markets via higher short-term inflation expectations, with the 1-year US inflation swap at its highest level since August. As a result, expectations for Fed rate cuts have been scaled back notably, putting upward pressure on Treasury yields across the curve (2yr ~3.80%, 10yr ~4.34%). For S&P 500 trading, this creates a key tension: Macro headwind: Higher oil → higher inflation expectations → fewer Fed cuts → rising yields (typically negative for equities, especially duration-sensitive sectors). Market resilience: Despite this, the S&P 500 continues to grind to fresh highs, supported by strong momentum and mega-cap leadership. The rally is being driven primarily by the “Mag-7,” with Nvidia leading and continuing to expand its market cap aggressively. However, there are early signs of fatigue beneath the surface, with the semiconductor index pulling back after an extended rally, suggesting some positioning is stretched. What matters for S&P positioning: Oil above $100 is a growing risk to margins and inflation-sensitive sectors Rising yields could begin to pressure valuations if they extend higher Market leadership is narrow, increasing vulnerability to any disappointment (especially with major tech earnings imminent) Momentum remains strong, but breadth is weakening Conclusion: The S&P 500 is showing impressive resilience in the face of worsening macro conditions, but the divergence between rising yields/oil and equity strength is becoming harder to sustain. Near-term direction will likely hinge on whether mega-cap earnings can justify current valuations—without that support, the market looks increasingly exposed to a pullback driven by inflation and rates. Key Support and Resistance Levels Resistance Level 1: 7203 Resistance Level 2: 7246 Resistance Level 3: 7325 Support Level 1: 7080 Support Level 2: 7000 Support Level 3: 6958 This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Opinions, estimates and assumptions expressed herein are made as of the date of this communication and are subject to change without notice. This communication has been prepared based upon information, including market prices, data and other information, believed to be reliable; however, Trade Nation does not warrant its completeness or accuracy. All market prices and market data contained in or attached to this communication are indicative and subject to change without notice.