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Senior Market Analyst
The S&P 500 has slipped back from its record high and is testing its 50 exponential moving average (EMA), yet the index remains above its rising trend line. The pullback comes as U.S. tech earnings expose a widening gap between AI spending and the returns investors can see. SpaceX swung to a profit while scaling up investment, whereas CoreWeave fell around 30% on its heavy debt load and continuing losses. For traders, the S&P 500 trend line now marks the difference between a routine pause and a deeper sell-off.
Fiona Cincotta, StoneX Senior Market Analyst, has spent more than 15 years trading and analyzing UK, European and U.S. markets across equities, forex, commodities and crypto assets. Her work combines fundamental and technical analysis, tracking how corporate earnings and tightening financial conditions feed into index trend lines and moving averages.
"Whilst the opportunity is enormous, so is the cost of capturing it," Cincotta says, and that tension runs through the U.S. tech earnings that accompanied the S&P 500's retreat from its record high. SpaceX swung from a $1.1 billion loss to a $4.4 billion profit while lifting capital expenditure, in contrast to CoreWeave, which fell around 30% under a heavy debt load. Meta grew revenue 26% on AI-driven ad targeting even as its free cash flow turned negative, and Tesla's operating income fell 56% despite an adjusted earnings beat. The result is an S&P 500 absorbing a tech sector where AI spending strengthens some balance sheets and strains others.
The S&P 500 remains above its rising trend line despite easing from its record high, with the index testing support at its 50 exponential moving average. According to Cincotta, the key takeaway from tech earnings is that "AI spending alone is not sufficient reason to invest", as investors look for evidence of returns. She adds that there is "more concern over how this is all being funded", notably as financial conditions become much tighter. Consequently, a break below both the S&P 500 trend line and the 50 EMA would open the door to a deeper sell-off, whereas a hold would leave buyers looking back toward the record high.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Fiona Cincotta, StoneX Senior Market Analyst
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The S&P 500 has eased back from its record high to test its rising trend line and 50 EMA as U.S. tech earnings expose the rising cost of AI. With investors demanding evidence of returns from AI spending, the trend line now separates a routine pause from a deeper sell-off.
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