SPX: Market is up but risks are still holdingS&P 500SP:SPXXBTFXThe S&P 500 continued its rebound during the week, extending a strong short-term rally driven largely by gains in technology and semiconductor stocks. Investor sentiment has been supported by expectations of solid earnings growth, particularly from AI-related companies within the index. However, the macro backdrop remains mixed, with inflation still above target, elevated bond yields, and slowing economic growth weighing on outlook. Energy prices and geopolitical tensions are adding to uncertainty, influencing both inflation expectations and market volatility. Overall, the index’s recent strength reflects momentum in key sectors, but underlying economic risks remain unresolved. The index closed the week at 6.816, which is more than 8% gain, after its recent lows from two weeks ago. Mega caps and large cap AI hardware companies were the clear weekly winners accounting with a big share in the S&P 500 gains. Nvidia extended a strong rally or around 14% w/w, while Intel surged by around 26% w/w supported by partnerships and AI regained optimism. Other chip and hardware names also posted significant weekly gains. This week on the loser side were companies in defensive and energy sectors. Energy large caps like Exxon Mobil or Chevron posted some 5% weekly loss due to drop in oil prices on ceasefire news. Software companies also finished the week in red, as rotation is taking place from software to hardware and AI-driven infrastructure companies. Analysts are in agreement that volatility will hold on US equity markets as long as there is instability in the Middle East, and strong swings in oil prices. Sharp moves in energy markets could trigger short-term pullbacks or sector rotations within the index, however, the latest moves shows that investors are staying positive as long as inflation stays under control regardless of evident cooling in the US economic output.