Fundamental Overview

The S&P 500 had been under pressure for a couple of days as geopolitical tensions escalated following reports that Trump was weighing strikes against Iran before the midterm elections.

The index rebounded after Trump said on Truth Social that the United States was holding productive discussions with Tehran and would not attack Iran before the midterm elections.

Markets responded by unwinding the escalation premium. Oil prices, Treasury yields and the US dollar all declined after Trump's post, improving risk sentiment and giving the S&P 500 a boost. The combined move illustrates why the Iran file matters so much to equities: crude carries a risk premium tied to the possibility of supply disruption in the region, while Treasuries and the dollar tend to attract defensive flows when tensions rise, so a de-escalation releases all three pressures at once and channels money back toward risk assets.

Looking ahead, Iranian Foreign Minister Araghchi said yesterday that Iran was reviewing the United States' latest proposal and expected to reply within the next few days. A positive outcome would support the stock market, as a selloff in oil prices would ease inflation and rate-hike concerns. A negative response, however, would not change much, though it could limit upside momentum — making Tehran's reply the first checkpoint for equity bulls in the days ahead.

Next week's US CPI report is also on the agenda and could put downward pressure on the market as traders hedge into the event. As the most closely watched reading on US consumer inflation, the release feeds directly into the rate expectations that underpin equity positioning, which is why hedging activity tends to build ahead of it. Hotter-than-expected data could trigger a hawkish repricing and weigh on the S&P 500, while a soft report could lead to a relief rally as hedges are unwound and rate-hike expectations ease.

S&P 500 Technical Analysis – Daily Timeframe

On the daily chart, the S&P 500 (CFD contract) pulled back recently amid renewed geopolitical tensions but bounced yesterday after Trump ruled out strikes on Iran before the midterms. If the pullback extends, buyers are expected to lean on the trendline with a defined risk below it, positioning for a rally into new record highs. Sellers, on the other hand, will want to see the price break lower to extend the correction toward the 7,500 level next, with the 7,613 level as the first target.

S&P 500 Technical Analysis – 4-Hour Timeframe

On the 4-hour chart, the price broke above the minor downward trendline that had defined the recent pullback. Buyers are expected to pile in around these levels with a defined risk below the broken trendline, keeping new record highs in their sights. Sellers, for their part, will want to see the price fall back below the broken trendline to extend the drop toward the major upward trendline.

S&P 500 Technical Analysis – 1-Hour Timeframe

On the 1-hour chart, a minor resistance zone sits around the 7,806 level. are likely to step in around the resistance with a defined risk above it, positioning for a drop into the major upward trendline. Buyers, in contrast, will look for a break higher to increase bullish bets toward new record highs. The red lines on the chart define the average daily range for today.

Upcoming Catalysts

The week concludes today with the University of Michigan Consumer Sentiment survey, although it is not expected to be a market-moving release.