S&P 500 Slips After Narrow Rally, Fed Hike Odds Rise

The S&P 500 declined 2.6% over the past week, halting a nine-week run of gains. The largest portion of losses occurred on Friday, June 5, when the index dropped roughly 2.64% after a stronger-than-expected US nonfarm payrolls report.

Market participation narrowed during the recent rebound. On Monday, June 8, the PHLX Semiconductor index climbed 5.6% and led an intraday recovery, but only three S&P 500 sectors posted gains that day: technology (+1.5%), energy (+1.1%) and consumer discretionary (+0.5%). The cumulative advance/decline line for NYSE-listed stocks slipped below a previous medium-term ascending support after showing a bearish divergence.

Pricing in U.S. interest-rate expectations shifted after the jobs data. Fed funds futures implied about a 63% chance of a 25-basis-point increase at the Federal Reserve’s October 2026 meeting and similar odds for a 25-basis-point move in April 2027. Traders moved to position for tighter policy following the payrolls report.

Technical indicators remained tilted to the downside. The S&P 500 traded below its 20-day moving average after the early-June selloff. The short recovery stalled near the 50% Fibonacci retracement of the swing from the June 5 high to the June 8 low. Hourly relative strength momentum held under a descending resistance line near the 50 level. Short-term support levels cited include about 7,340 and 7,270, with further congestion near 7,200. Immediate resistance sits near 7,566 and 7,600.

The weekly drop was the index’s worst since the week of March 23, 2026, when markets reacted to geopolitical developments related to the US-Iran conflict. Market strategists pointed to weakening breadth combined with a repricing of Fed policy as elements behind recent market moves.

Traders will be watching incoming US data and Federal Reserve commentary for changes in rate expectations and any renewed broad participation in equity gains.