The S&P 500 pushed higher on Tuesday, closing at 6,678 after a gain of almost one percent.
Key Takeaways:
Yardeni Research expects the S&P 500 reaching 7,000 this year
The probability of a market downturn has increased due to AI-bubble concerns
Technical indicators show the rebound is still fragile
The rebound arrived after several shaky sessions, offering some relief across the market. Even so, traders remain uneasy, and optimism is far from unanimous. The latest move looks like a recovery, but sentiment continues to swing between confidence and caution.
Forecast Toward 7,000 Comes With Strong Warning Signs
Yardeni Research still expects the S&P 500 to reach 7,000 by year-end, yet the tone of the analysis has shifted noticeably. Concerns around a potential AI-driven bubble, weakening market sentiment and mounting credit stress have increased the firm’s expectations for a bearish scenario.
Rather than celebrating the rebound, the report suggests that the market’s risk profile has become more serious and that investors should not assume the latest uptick is the beginning of uninterrupted upside.
Fear vs. Fundamentals — Which One Wins?
Yardeni highlights a contradiction that defines the current market: sentiment is getting darker, but the economy is not signaling collapse. Retail spending remains exceptionally strong and the latest Redbook sales figures reinforce that the consumer remains one of the most reliable supports for the U.S. economy.
Historically, deep fear has often preceded powerful rebounds, and that possibility remains on the table even as investors brace for volatility.
Technical Indicators Show a Rebound, But Not a Trend Shift
Charts offer a similar split message. The S&P 500 is climbing again, but it remains below its 50-day moving average, meaning sellers still hold short-term control until proven otherwise. The MACD continues to print a mildly negative signal, showing that upside momentum has not fully returned.
The RSI is hovering near the lower mid-range — neither oversold nor overbought — reflecting hesitation rather than conviction. Tuesday’s green session shows that dip buyers are stepping in, but the market has not yet escaped the gravitational pull of recent selling pressure.
The Road Ahead Favors Volatility
Whether the market rallies toward 7,000 or turns lower again depends on which force strengthens first: improving economic signals or intensifying fear around valuations and credit risks. These competing storylines are now moving at the same time, creating an environment where sharp moves — both upward and downward — are likely. For now, traders are preparing for a period where the next decisive swing may happen quickly and unexpectedly.
