Looking to the Futures

Indexes retreated on Thursday as technology stocks were weighed down by broadening AI fears, mixed job numbers, and market participants bracing for Friday's inflation report. March expiration S&P 500 Futures (/ESH26) settled at 6851, falling -1.57% for the day. So far this year, the S&P 500 Index has seen a roughly -0.2% reduction compared with the Nasdaq Index which has fallen roughly -3% year to date. The Dow and Russel 2000 Indexes have shown strength thus far, up roughly +3% and +5.4% respectively. Despite the turbulence in 2026 which has seen heightened geopolitical risks, AI disruption/bubble fears, precious metals soaring, and a new Fed Chair selection to name a few, the S&P 500 Index has held relatively resilient. With the VIX spiking back above 20 on Thursday and all eyes on Friday's inflation data, that resilience might be tested once again. 

January's consumer price index report, which is set to be released Friday morning at 8:30 AM ET, is expected to show CPI and core CPI both up +2.5% year-over-year. CPI is also expected to show a +0.3% increase month-over-month. Wednesday's job numbers showed rather positive results with the unemployment rate ticking down to 4.3% and January non-farm payrolls surprising to the upside. With recent signs that the labor market could finally be stabilizing, a higher-than-expected inflation print on Friday could cast further uncertainty around the number of cuts we can expect from the Fed this year. As of Thursday night, the CME FedWatch tool showed that markets are discounting a roughly 8% chance that the Fed cuts rates by 25-basis-points at their next meeting on March 18th. 

One positive for S&P 500 stocks that has helped keep it afloat, has been continued strength in earnings results. With more than two-thirds of S&P 500 companies having reported their Q4 earnings thus far, 76% of them have exceeded wall street expectations. According to Bloomberg Intelligence, S&P earnings are expected to see their tenth consecutive quarter of year-over-year growth, climbing to +8.4% in Q4. 

As technology and the "Mag 7" stocks continue to show weakness, rotations into other areas have been seen at a rather substantial level. Taking a closer look at the broadening that is happening within the market and specifically the S&P 500 index, the sector leaders may surprise you. Energy (+20.67%), Consumer Staples (+15.36%), and Materials (+15.3%) round out the top performing sectors so far year-to-date. On the other hand, Financials (-5.86%), Consumer Discretionary (-4.91%), and Information Technology (-4.45%) have been the worst performing sectors year-to-date. According to data compiled by FactSet, more than 60% of the individual stocks within the S&P 500 have been outperforming the index, which is a remarkable shift from 2023-2025, where that number hovered around 30% or less each year. 
 

Looking at the daily chart for /ESH26, prices dropped sharply from the highs at the beginning of the day on Thursday, settling at 6851. Prices ripped through and settled below both the 20 and 50-day Simple Moving Averages while closing right above the 100-day SMA. The 100-day has been tested multiple times over the past 3 months but has seen bounces each time so far. We'll see if that trend continues to hold true. The 14-day RSI closed at 42.4449, indicating rather neutral/mildly bearish momentum. Volume on Thursday was higher than the 50-day average with 1,993,069 contracts traded. The 50-day average is currently sitting at 1,409,089. According to the Daily Hightower Report, /ESH26 may experience support at the 6781.38 and 6736.32 levels and resistance at the 6932.12 and 7037.81 levels. 

20-Day SMA:                6946.23

50-Day SMA:                6926.61

100-Day SMA:              6844.75

200-Day SMA:              6528.61

14-Day RSI:                   42.4449

50-Day Volume Avg:     1,409,089

8:30 AM ET - Consumer Price Index

8:30 AM ET - CPI Year Over Year

8:30 AM ET - Core CPI

8:30 AM ET - Core CPI Year Over Year

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