Tech Pushes S&P 500 Toward Record as Markets Brace for Key Economic Data

US equities extended last week’s sharp rebound, with technology stocks powering the S&P 500 back toward record territory. A bounce in AI-linked names helped stabilize sentiment after recent volatility, while bonds and the dollar were little changed ahead of a heavy slate of economic data that will shape the Federal Reserve outlook. Commodities stood out, with gold pushing above $5,000 as investors continued to hedge macro uncertainty.

Key Headlines & Market Movers:

• Tech Rebound Drives Index Gains: Technology stocks remained the engine of the rally as investors rotated back into beaten-down AI and software names. Semiconductor and software groups posted strong back-to-back gains, with Oracle Corp. surging on renewed optimism around enterprise AI spending. Strategists broadly framed the recent tech selloff as a necessary reset rather than a breakdown in fundamentals, noting revenue growth expectations remain elevated even as valuations have compressed.

AI Debate Fuels Volatility, Not Capitulation: Concerns around AI-driven disruption, sparked by new automation tools from Anthropic, continue to ripple through markets. Hedge funds increased short positions at a record pace, underscoring skepticism around software business models. Still, major strategists at Morgan Stanley and CFRA argue that earnings growth in mega-cap tech remains strong enough to absorb near-term uncertainty, with volatility seen as part of a healthy rotation rather than a systemic risk.

• Macro Focus Shifts to Jobs and Inflation: Markets are bracing for a pivotal week of US data, including employment and CPI reports. Expectations are for modest job growth and steady unemployment, alongside further evidence that inflation pressures are easing. Several strategists cautioned that markets may respond asymmetrically, rewarding “Goldilocks” outcomes while punishing both upside and downside surprises, as investors reassess the timing and pace of potential Fed rate cuts later this year.

Commodities and Global Moves Add Crosscurrents: Gold’s move above $5,000 highlighted persistent demand for real assets, while oil prices rose on renewed geopolitical concerns around Middle East shipping routes. Outside the US, Japanese equities hit record highs following a decisive election result, and UK assets rebounded as political support for Prime Minister Keir Starmer solidified. Crypto markets remained volatile but stabilized near recent highs.

S&P 500 Sector Performance

Looking Ahead

Near-term market direction likely hinges on whether incoming data can reinforce the “soft landing” narrative. If employment remains resilient and inflation continues to cool, risk assets should stay supported despite elevated volatility. That said, crowded positioning and ongoing AI skepticism argue for selectivity, favoring balanced allocations and companies with clear earnings visibility over pure momentum trades.

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