Breaking Through Resistance
Equity markets are squeezing higher, with the S&P 500 trading at 7267 and pushing past what had been a major area of resistance at 7260. The combination of a heavy economic data calendar and a busy earnings week has provided fuel for the move, and the bullish posture of the tape — making higher highs and higher lows with broad participation — suggests this rally has stronger underpinnings than a simple narrow-leadership melt-up.
Technology stocks remain at the heart of the action. The scale of capital expenditure spend across the hyperscalers continues to drive the semiconductor trade. SanDisk and Western Digital, which initially traded weak after blowout earnings, flipped from red to green during the session, and Micron has been leading to the upside. That kind of intraday recovery in memory and storage names is typically a tell that buyers are willing to step into any short-term weakness in the AI build-out theme.
Mixed Economic Signals
The week's economic releases offered a more nuanced picture than the headline rally suggests. ISM manufacturing PMI came in at 52.7, holding in expansionary territory and roughly matching the prior print, but missing the Street's expectation of 53.1. The fact that manufacturing is even in expansion is significant given that this segment of the economy has been mired in its own recessionary cycle for most of the last three years.
The more eye-popping number was ISM manufacturing prices, which jumped to 84.6 against expectations of 80 and a previous print of 78.3. To find a comparable level of input-price pressure you have to go back to April 2022 — a massive rerating higher that should, in theory, weigh on margins. The energy component is clearly part of that story, but logistics costs and input chemicals are also being affected by the disruption around the Strait of Hormuz.
Inflation data therefore looked stickier than markets would prefer, while the labor side told a different story. Initial jobless claims came in notably low, suggesting the employment side of the economy remains firm. The result is a delicate balance — pricing pressure on one hand, employment strength on the other — that equities are happy to interpret constructively.
Crude Oil and the Iran Overhang
Crude oil is trading around the $100 level on West Texas Intermediate, having dropped roughly $3 in less than an hour on reports that Iran has sent a response to a draft peace agreement. There may also be some traders attempting to front-run a potential deal. Yet the situation remains unresolved: a 60-day congressional deadline tied to the war is still in play, leaving geopolitical risk as a real overhang.
The $100 mark on WTI is a powerful psychological level, and some participants have been fading prints into it. Looking at the longer-term chart, two scenarios are plausible. The bullish case sees crude still in an uptrend and merely consolidating. The bearish case identifies a developing head-and-shoulders pattern, with the current move forming a right shoulder and a neckline near $82 to $85. Either way, the physical market still matters most: supply constraints persist, and futures can disconnect from physical reality only for so long.
Crack spreads — the proxy for refiner profitability — continue to move higher, indicating that byproduct prices are not falling as aggressively as inputs. That points to elevated demand and ongoing draws on inventories, and the basic equation is unchanged: drawing inventories with rising demand means higher prices ahead. The 20-day moving average sitting near $97 is a reasonable area of support to watch.
The Friday-to-Sunday Pattern
A familiar rhythm has emerged in recent weeks. Positive geopolitical headlines arrive on Fridays — often via Axios — crude oil gets crushed to the downside, equities march higher into the weekend, and then on Saturday and Sunday the optimism unravels. Oil rerates higher, equities give some back into Sunday's session, and the cycle resets on Monday. This Friday looks structurally similar to the last several. With a lighter calendar next week, the question is whether that pattern repeats again or finally breaks.
Big Tech Earnings: Five of Seven
Five of the so-called Magnificent Seven reported this week, and even with Microsoft lower on the week and Meta down more than 9%, there was plenty for bulls to like.
Alphabet delivered a phenomenal quarter, demonstrating that it is not only monetizing AI but also explaining the rationale for elevated capex through clear return-on-investment metrics. Its work in the TPU space could be a meaningful driver over the next several quarters.
Microsoft's quarter was strong on the surface, but margins have started to narrow, raising questions about pricing pressure and whether the company can offset it through higher pricing power. Technically, $400 looks like a key support level where buyers are likely to step in.
Meta saw a sharp drop, with buyers attempting to consolidate around the $600 level. The company is increasing capex but has been unusually vague about where that spend is being directed. Compounding the concern, daily active users contracted on a quarter-over-quarter basis — a rare data point for the platform and one that warrants attention.
The unifying takeaway is that capex spending continues to ramp across the group. That spend is fueling semiconductors, energy, and industrials, broadening the market's foundation. A wider base of leadership means that if individual names hit hiccups, the index has more support to lean on.
Volatility and What's Next
The VIX has drifted down to around 16. That feels surprising given the recent geopolitical noise, but it has to be set against the prior regime — six to seven weeks, nearly two months, of the VIX sitting at 25 or even 30. That elevated period was itself outside the norm, and the current readings imply roughly a 1% daily move, much closer to the implied volatility regime that prevailed before the spring pullback.
Looking at the technicals, 7260 remains the key focus area on the S&P 500. The 15-minute chart looks constructive, though traders should watch for a potential spinning-top candlestick that could signal indecision or even a near-term reversal. Market breadth still looks bullish across the board. The one note of caution comes from the daily chart, where some oscillators are flashing bearish divergence and the MACD is hinting at a potential rollover. But price remains king, and right now price is telling us higher.
The Bigger Picture
What ties the week together is that a bullish equity tape is absorbing genuinely mixed signals — sticky input prices, geopolitical uncertainty, narrowing margins at some hyperscalers, contracting users at one of the largest platforms — and choosing to focus on the positives: low jobless claims, monstrous capex commitments, broadening participation, and the prospect of an Iran deal pulling crude lower. Whether that optimism survives another weekend cycle is the question. For now, with the index at fresh highs and the VIX subdued, the path of least resistance is still up.