What Happened in the Markets Last Week
Major Indexes Fall Into Correction Territory
The S&P 500 dropped 1.5% and Nasdaq plunged 1.8% to six-month lows on Friday, with the Russell 2000 becoming the first major index to officially enter correction territory. This marked the fourth consecutive week of declines for major averages amid escalating geopolitical tensions.
Energy Sector Rallies as Oil Prices Surge
Energy was one of the few bright spots as West Texas Intermediate futures climbed following reports that Iraq declared force majeure on all oilfields. Energy majors like Exxon Mobil gained 1% while most other sectors declined, with utilities falling over 4%.
Treasury Yields Hit Eight-Month Highs
The 10-year Treasury yield finished at 4.39% and the 2-year at 3.88%, reaching their highest levels since July 2025. Rising yields reflected an increasingly hawkish Federal Reserve outlook despite the Fed keeping rates steady in the 3.5%-3.75% range.
Micron Delivers Massive Revenue Beat
Micron Technology crushed earnings expectations with revenue of $23.86 billion versus the anticipated $19.19 billion, representing a 24% surprise. The memory chip maker’s fiscal second-quarter revenue skyrocketed 196% year-over-year, driven by strong AI demand.
Middle East Tensions Rattle Global Markets
Escalating Middle East conflict drove markets lower as investors fled to safety amid rising oil prices. The geopolitical uncertainty contributed to the broad market selloff, particularly impacting technology and consumer discretionary sectors.
S&P 500 Weekly Outlook
The S&P 500 enters the week at 6,506.49 after declining 1.51% in the previous session, with technical indicators flashing strong sell signals across multiple timeframes. This week’s light economic calendar may allow market focus to shift toward the recent hawkish Fed pivot and elevated Treasury yields, with the 10-year note now trading at 4.39%, its highest level since July 2025.
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Bull Case: What Could Drive the S&P 500 Higher
🏭 Productivity Data Catalyst
Tuesday’s Q4 final productivity report could provide positive momentum if it shows continued efficiency gains in the U.S. economy. Strong productivity growth would support the narrative that corporate earnings can weather higher rates while inflation pressures moderate.
🛒 Consumer Resilience Check
Friday’s final University of Michigan Consumer Sentiment reading for March offers a key gauge of household confidence amid the current rate environment. A stabilization or improvement in sentiment could signal that consumers remain willing to spend despite elevated borrowing costs.
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Bear Case: Risks That Could Weigh on the S&P 500
💰 Rate Cut Expectations Collapse
The Fed’s March dot plot revealed a hawkish shift, with only seven members expecting any rate cuts in 2026 and the median rate projection holding at 3.4%. Rising inflation expectations, with PCE forecast climbing to 2.7% from 2.4%, suggest the easing cycle may be over before it truly began.
📈 Treasury Yield Pressure
The 10-year Treasury yield’s surge to 4.39% represents a significant headwind for equity valuations, particularly in rate-sensitive sectors. Continued yield expansion above the 4.2% level signals bond market skepticism about the Fed’s ability to manage inflation without more aggressive policy measures.
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Key Market Markers
🔒 6,731-6,782 Resistance
The highlighted resistance zone between 6,731-6,782 remains the key upside barrier for any recovery attempt. A daily close above 6,731 would be the first sign that bulls are regaining control of the narrative.
📊 4.40% Yield Threshold
Watch for the 10-year Treasury yield to potentially test the 4.40% level, which could represent a psychological barrier. A sustained break above this level would likely intensify pressure on equity multiples.
📈 Richmond Fed Index
Tuesday’s Richmond Fed Manufacturing Index for March will provide insight into regional economic conditions. Any significant deterioration could add to concerns about economic momentum heading into Q2.
🇬🇧 UK Inflation Impact
Wednesday’s UK CPI data for February may influence global rate expectations and risk sentiment. Higher-than-expected inflation could reinforce the narrative of persistent price pressures across developed markets.
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Bottom Line
The S&P 500 faces a critical juncture at 6,607 support with bearish technical momentum and elevated Treasury yields creating significant headwinds. The light economic calendar may amplify volatility as traders focus on the Fed’s hawkish pivot and rising rate expectations. While support levels offer potential stabilization points, the combination of deteriorating technicals and restrictive monetary policy suggests downside risks outweigh upside potential. A break below 6,607 would likely accelerate selling toward 6,130, while any recovery must first reclaim 6,731 to signal a meaningful shift in sentiment.
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