What spoiled the day was fixed by the evening — on Wall Street, the proverb worked in reverse. The S&P 500 closed lower for the third straight day, testing the 50-day moving average, while the Nasdaq 100 and the Dow Jones actually ended in positive territory. The market was internally split: a sell-off in chipmakers and other hyper-runup tech names outweighed hopes that falling oil would ease pressure on the Fed.

Treasury yields followed Brent lower, cooling inflation fears. However, the real stimulus arrived after the bell. Micron Technology reported revenue of roughly $50 billion, well above the Wall Street consensus of $43.2 billion. The surprise underlined that interest in tech has not waned and that the AI trade remains intact.

Should investors panic over the retreat in growth leaders? Probably not. The tech pullback looked more like rotation and profit-taking than a structural alarm. When shares run up too fast, a correction is almost inevitable.

S&P 500 dynamics and JP Morgan forecasts

Most of Wall Street remains constructive. JPMorgan raised its year-end S&P 500 target from 7,600 to 7,800. The bank expects an uneven path higher: strong Q2 earnings have already lifted the bar ahead of the next reporting season. Consensus earnings growth for S&P 500 companies has been revised up to about 20% over the next two years — a rare 10-percentage-point positive revision for 2026–27, typically seen only after major shocks or recoveries (e.g., post-dotcom 2001, post-pandemic 2020).

Support for the S&P 500 also came from a downshift in Fed-tightening odds. The probability assigned to a September fed-funds hike has pulled back from about 71% to a more modest 65%. The futures market now doubts two rounds of rate hikes as previously priced, on the back of the Brent sell-off and the related declines in Treasury yields and inflation expectations.

Which force will prevail — the tailwind from falling oil or the headwind from overheated tech valuations? If oil's disinflationary impulse wins, the S&P 500 will resume record highs. If valuation pressure dominates, the market will have to rely on episodic evening boosts from individual issuers.

Technically, the daily chart shows that the S&P 500 is completing a 1-2-3 reversal pattern. A sustained close below the moving averages would be a worrying sign, as would the formation of a bar with a long lower wick (pin-bar). A drop below the index low at 7,335 would catalyze a corrective move and provide an opportunity to scale up previously established short positions.