⬇️US500 Sees Largest Correction Since March

S&P 500 futures (US500) are experiencing a significant pullback after the final meeting chaired by Jerome Powell delivered a "cold shower" to the markets in the form of a hawkish bias. Although Powell is stepping down, the Fed's hawkish wing (represented by Hammack, Kashkari, and Logan, among others) made it clear that inflation—fueled by energy shocks and rising oil prices—remains too high a risk to consider policy easing.

Investors are concerned about the internal rift within the Committee, which suggests that the post-Powell era could usher in an even more restrictive approach to interest rates. This monetary uncertainty is hitting the markets at the worst possible time—just before the release of key financial results from Big Tech.

However, it is worth noting that a major source of anxiety on Wall Street is not necessarily the earnings themselves, but rather the "breathtaking" capital expenditure (Capex) on AI development. The market is anxiously monitoring the investment plans of the largest tech firms, fearing for short-term profitability in the face of drastically increasing outlays.

Alphabet (Google):

• Projected 2026 Capex: $175–$185 billion, nearly doubling the already massive spending of 2025 ($91.4 billion).

• Market Reaction: Investors are frantically searching for any signals of a downward revision to these forecasts due to concerns over their impact on margins.

Microsoft:

• Estimated Capex for the Current Quarter: A staggering $35.2 billion.

• Management Signals: Declarations that spending in the second half of the year will exceed the first half have sparked fears of further "growth" in these outlays in the coming years.

• Key Issue: The lack of proprietary AI chips means every dollar spent on infrastructure is weighed down by high margins from key suppliers (Nvidia).

Meta:

• Planned 2026 Capex (Mark Zuckerberg): $115–$135 billion, compared to less than $70 billion in 2025.

• Total Operating Expenses: Could reach an unimaginable sum of $169 billion.

Summary

The current pullback on the US500 is the result of a "double blow." On one hand, a hawkish Fed may limit hopes for cheaper capital; on the other, Big Tech is entering a phase of unprecedented spending that could "burn" through cash faster than AI generates real profits. If today’s reports confirm that the technological arms race will cost more than even the most exaggerated scenarios suggested—and if we don't see a significant return on these investments—the support level at 7,100 points on the US500 could be severely tested. At the same time, cutting these expenses could be perceived by investors as a sign of weakness; therefore, the only way out of this situation is to demonstrate high returns and a growing user base.

The US500 is retreating for the second consecutive day, potentially marking its largest correction since late March. The last time the index saw two consecutive days of declines was during that period. The first major support lies at 7,100, followed by 7,000 at the 23.6% Fibonacci retracement level. Source: xStation5