Wall Street Wobbles After Midterms: Can CPI Rescue the S&P 500?

Last week, investors were hoping for another move towards 7,600. Instead, the market delivered a shock.

The S&P 500 fell 2.68%, closing Friday at 7,376.86, following a brutal 4.4% single-day decline on Thursday.

Technology and semiconductor stocks took the biggest hit.

What went wrong?

A combination of political uncertainty following the US midterm elections, growing concerns over AI investments and renewed interest-rate worries.

But the bigger question is:

Is this just a temporary correction, or the beginning of something bigger?

Let's look at what matters this week. 👇

🎯 Three Technical Levels to Watch

The daily chart shows the index approaching a crucial support zone.

🔴 7,800 – Major Resistance: A recovery towards the previous record high would require stronger market momentum.

🟡 7,600 – Immediate Resistance: Reclaiming this level would be the first meaningful sign of recovery.

🔵 7,300 – Critical Support: The most important level right now. A decisive break below it could open the door to a deeper correction.

🔥 What Could Move the Market This Week?

1. US Inflation (CPI): Tuesday's inflation report is the biggest event to watch. Hotter-than-expected inflation could increase interest-rate concerns, while a softer reading may provide relief to equities.
2. AI Earnings: Results from CoreWeave, Cisco, Applied Materials and Nebius will be closely watched. Investors want reassurance that AI demand remains strong despite growing concerns over the sector.
3. Political Uncertainty: Concerns over AI regulation, government funding and future policy decisions could continue to influence investor sentiment.

📊 Two Possible Scenarios

🟢 Bullish: If inflation data is supportive and AI earnings remain strong, the index could hold above 7,300 and recover towards 7,500–7,600.

🔴 Bearish: Hot inflation or disappointing AI results could push the index below 7,300, increasing the risk of a deeper correction.

💡 What Should Investors Do?

After such a sharp sell-off, chasing a quick recovery can be risky.

Watch how the index behaves around 7,300. Avoid aggressive positioning until buyers show stronger conviction.

Capital protection comes first.

🔍 The Bottom Line

The market is facing a crucial test.

7,300 is the level bulls need to defend.

7,600 is the level they need to reclaim.

Until then, caution makes sense.

What's Your View?

Is this a healthy correction in a longer-term bull market, or are we heading towards a deeper decline?

Let's hear your thoughts.