The S&P 500 Index retreated by over 1% on Monday as market risks rose. It dropped to a low of $6,837, down from the year-to-date high of over $7,000.
Software and Alternative Asset Stocks Tumble Amid AI risks
The S&P 500 Index, which tracks the biggest American companies, retreated as investors reacted to key macro risks in the United States. One of the main risks is that President Donald Trump implemented new tariffs after the Supreme Court ruled against his previous ones.
The other main risk is that the Trump administration is considering launching an attack on Iran, a move that may spiral out of control. Iran has warned that it will launch a major attack against US bases, Iran, and even shutting the Strait of Hormuz.
The S&P 500 Index also retreated as software and other technology companies slumped amid the ongoing fear that AI will disrupt them. For example, IBM stock had its worst day since 2000 after Anthropic, hinted that its tool could modernize its COBOL, a programming language run on its computers.
Other software companies like Salesforce, Workday, and Intuit continued falling because of the rising fear that they may be disrupted by artificial intelligence tools.
At the same time, companies in the alternative asset industry continued their downtrend because of the recent Blue Owl challenges. Investors are worried about Blue Owl’s liquidity as cracks in its fund emerged. Companies like KKR, Apollo, and Blue Owl have dropped by double digits from their highest points last year.
The next major S&P 500 news will be the upcoming NVIDIA earnings, which will provide more details about the AI industry and demand for its GPUs.
S&P 500 Index Technical Analysis
The S&P 500 Index has retreated in the past few days, moving from over $7,000 to the current $6,837. A closer look shows that it has moved to the 50-day moving average.
The index has also formed a rising wedge pattern, a common bearish reversal sign in technical analysis. It has also formed a bearish divergence pattern as the Percentage Price Oscillator and the Relative Strength Index have continued falling.
Therefore, the index may have a bearish breakout, potentially to the key support level at $6,530, its lowest level in November last year. The bearish outlook will be invalidated if it moves above the all-time high.