6 min read The S&P 500 closed around 7475 on Wednesday, largely flat for the session, as a sharp selloff in semiconductor stocks offset a rotation into other pockets of the market. The index enters today holding just below the 7,500 area it has been testing for weeks, with June’s non-farm payrolls report, brought forward a day for the Fourth of July holiday, arriving as the next potential catalyst.
Chip stocks led Wednesday’s weakness. Micron and Sandisk each fell more than 10%, and the semiconductor sector broadly retreated as investors reassessed how much further the AI infrastructure trade could run. Meta helped cushion the broader index, surging on reports it may expand into AI cloud infrastructure, in what strategists framed as a rotation out of the most stretched AI names rather than a broad risk-off move.
AI bubble concerns are back in focus. Bank of America’s Bubble Risk Indicator, which scores assets from 0 to 1, sits at 0.91 for the semiconductor sector, though the firm stopped short of calling it a fully-fledged bubble. Other valuation measures also look stretched relative to history, though some strategists point to improving market breadth as a sign this isn’t a repeat of the dot-com years.
Fed Chair Kevin Warsh appeared on a panel with ECB President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem at the Sintra forum in Portugal this week, his first major appearance on the global stage. Warsh reiterated that inflation remains too elevated for comfort, while also striking an optimistic tone on AI’s potential to support jobs and productivity. He offered no explicit guidance on the path for rates, consistent with his preference for leaving forward guidance behind.
All eyes now turn to June’s jobs report, due at 8:30am ET today. Forecasts cluster in the 100,000 to 115,000 range for payrolls, with unemployment expected to hold around 4.3%. A stronger than expected print could harden the case for a more restrictive Fed for longer, while a soft one could reopen the conversation around rate cuts.
This is the S&P 500’s second attempt at cracking key resistance this quarter, having previously tested this same zone in mid-June, so how it resolves this time could set the tone heading into the second half.
Daily
Yesterday’s candle closed as an indecision candle, a doji-style close with a small body and wicks on both sides, reflecting a market holding its breath ahead of today’s catalyst. The daily 20 EMA sits above the 50 EMA and price continues to print higher lows, which could keep the broader uptrend intact. At the same time, a run of lower highs has formed, and together the two suggest a symmetrical triangle is taking shape.
With NFP data landing today, a day earlier than usual, the report could be the catalyst that resolves this pattern. 7,500 is the level to watch on the upside. A decisive break above it could open the door to a retest of the 7,600 all-time-high area.
If the jobs data instead acts as a bearish catalyst, 7,400 is the key support to watch, a level that aligns with both the triangle’s lower ascending trendline and the daily 50 EMA. Failure to hold that zone could produce the first lower low of the move, bringing the next support area around 7,150 into play.
Key levels: 7,500 resistance, 7,400 support (triangle trendline + 50 EMA), 7,150 deeper support, 7,600 ATH area.
4H
On the 4-hour chart, price is testing the 7,500 resistance zone directly, and a subtle but valid bearish divergence is forming between price and RSI. The accumulation/distribution line has not broken down yet, but a break below the 0.618 fib level could confirm that divergence and tip the A/D line into a breakdown too, potentially opening a move back toward the 7,400 support zone.
Price is currently sitting inside a short-term reload zone, defined by fib anchors drawn from the swing points marked on the chart, with today’s jobs data likely to determine which way it resolves.
Key takeaways:
- 7,500 is the pivotal resistance level on both timeframes going into NFP
- A break higher could open a path to the 7,600 ATH zone
- A rejection could send price toward 7,400 support, with 7,150 as the next level below that
- Bearish RSI divergence on the 4H adds some caution to the bullish case near-term
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