S&P 500 Holds Near 6,512 as Investors Weigh Fed Policy Path Against Surging AI Earnings

The benchmark index remains in a solid uptrend, supported by strong corporate results from the tech sector, while markets await crucial inflation data that will likely guide the Federal Reserve's upcoming interest rate decision.

NEW YORK – The S&P 500 index is holding steady near the 6,512 level as investors balance positive corporate earnings reports with anticipation for key economic data. The index has successfully maintained its bullish channel since May, demonstrating resilient momentum even as questions persist regarding the Federal Reserve's policy trajectory.

From a technical perspective, the S&P 500's daily chart shows it is trading comfortably within an ascending channel. Immediate support is reinforced by the 20-day Exponential Moving Average (EMA) at 6,446 and the 50-day EMA at 6,337. Deeper support levels are found at the 100-day EMA (6,179) and the 200-day EMA (5,986).

The Relative Strength Index (RSI), currently at 61, indicates a healthy uptrend without signaling an overextended or overbought condition. Upside targets are clear, with the top of the channel around the 6,600-6,650 range representing the next major objective if momentum continues. Conversely, a failure to hold above 6,400 would shift focus back toward the 6,180 support level.

Inflation Data to Guide Fed's Next Move

The macroeconomic focus this week is squarely on inflation, with the Producer Price Index (PPI) expected today and the Consumer Price Index (CPI) tomorrow. Following weaker-than-expected jobs data, markets are almost fully pricing in a rate cut at next week's Fed meeting. The debate has now shifted to whether the cut will be 25 or 50 basis points.

A soft inflation reading would strengthen the case for more aggressive monetary easing, boosting bullish sentiment for equities. In contrast, hotter-than-expected inflation could temper those expectations and pressure the index's support structure, potentially triggering volatility ahead of the Fed's decision.

Corporate Earnings Momentum Bolsters Sentiment

A constructive earnings backdrop is providing a strong tailwind for the market. Oracle (ORCL) shares soared 28% in after-hours trading following a report of massive demand for its AI-powered cloud services. Revenue from its multicloud database products hosted by Amazon, Google, and Microsoft saw an extraordinary increase of 1,529%. This result reinforces the theme of AI infrastructure spending as a central growth driver, boosting not only Oracle but also sentiment across the entire S&P 500.

The strength is broad-based, as evidenced by the Nasdaq reaching a new record high and the Dow Jones Industrial Average adding 0.43%.

For the S&P 500, the outlook remains positive, with a clear path to continue its rally if accommodative monetary policy aligns with ongoing earnings momentum. As noted previously, AI-driven earnings and monetary easing remain the two primary drivers for U.S. equities, suggesting the structural uptrend continues to favor higher highs into the fourth quarter.