Market Data / Market note
Oil and Inflation Pressure Stocks as Fed Decision Nears
Can Stocks Hold as Oil, Inflation, and Fed Risks Build?
S&P 500 futures are slightly lower this morning as oil and Treasury yields continue to drive the early market action, although futures have recovered somewhat as oil backed away from its overnight high. The bigger relationship remains oil, inflation, Treasury yields, and the Federal Reserve, because what happens there will help determine whether stocks stabilize or come under more pressure.
In One Minute
The market is basically waiting on inflation and the Fed while oil keeps adding pressure to the equation. PPI comes Thursday morning, CPI comes Friday, and the FedWatch tool currently shows a 58.4% chance that rates will be raised next week. For stocks, 7570 remains the key S&P 500 level. For Bitcoin, the level is around $77,000. And in the background, the 10 year yield is still struggling with resistance above 4.8%.
The Setup
The S&P 500 Index (SPX) still has a neutral to bullish structure as long as it stays above 7570. If that breaks, the market moves into a neutral area between 7570 and approximately 7400. Below 7400 is where the technical picture becomes much more concerning.
At the same time, the CBOE 10 Year Treasury Note Yield Index (TNX) moved above 4.8% and ran into resistance. The U.S. Dollar Index (DXY) also remains weak after breaking its bear flag, with support around 9850 and then 9770 if that first level fails.
What Changed
West Texas Intermediate Crude Oil (WTI) gained about $1.35, or 1.5%, and reached $94.73 overnight before pulling back below an important pivot high.
That matters because when oil was higher, Treasury yields were higher and S&P futures were weaker. As oil pulled back, yields eased and futures recovered.
Artificial intelligence related stocks are also attracting buyers again. Oracle Corporation (ORCL) is near $168 after closing just below $159. Micron Technology, Inc. (MU) could potentially reach $1,150, about $100 higher than the level described, while Bloom Energy Corporation (BE) is also benefiting from renewed interest in artificial intelligence infrastructure.
Why It Matters
Oil is the connection point. Higher oil prices can push inflation higher, which can push yields higher and increase pressure on the Federal Reserve to raise rates.
That is why this week's PPI and CPI reports matter so much. They arrive directly ahead of the Federal Reserve decision on the 16th and could change that current 58.4% rate probability.
Key Levels
| Asset | Current Area | Support | Resistance | What Matters |
|---|---|---|---|---|
| S&P 500 Index (SPX) | Not stated | 7570, then 7400 | Upper trend line | Above 7570 keeps the bullish bias intact |
| 10 Year Yield (TNX) | Above 4.8% earlier | Above 4.8% area | Resistance is still rejecting yields | |
| U.S. Dollar Index (DXY) | Not stated | 9850, then 9770 | A break of 9850 opens the next support | |
| WTI Crude Oil (WTI) | High of $94.73 | Key pivot high | Oil is influencing yields and Fed expectations | |
| Novartis AG (NVS) | Around $139 | $133 | $133 also aligns with the 50% Fibonacci retracement | |
| Oracle Corporation (ORCL) | Near $168 | $179 to $180, $182 | $182 is the 50% Fibonacci retracement, with a gap near $200 | |
| Bitcoin (BTC) | Around $77,000 | Around $77,000 or just below | Major resistance above | Holding keeps the breakout setup alive |
Novartis is also worth watching after dropping about 12%, its biggest one-day decline since March 2020. The stock fell more than $20 during the morning session, and $133 is the main technical area, with the setup described as roughly a 75% success rate opportunity.
Bull Case
For stocks, the bullish case stays alive while the S&P 500 holds 7570.
Oracle could continue higher toward resistance around $179 to $180 and the 50% retracement near $182, with the unfilled gap around $200 still above that.
Bitcoin can also set up for another breakout as long as the area around $77,000 holds.
Gold (GC) has already broken its descending trend line and bounced from short term support, while Silver (SI) has also held support. Natural Gas (NG) remains above its pivot line, keeping its bullish setup intact.
Bear Case
A break below 7570 on the S&P 500 moves the market into the neutral zone, and a break below approximately 7400 would raise the risk of a larger selloff.
Bitcoin breaking below roughly $77,000 would increase the risk of a deeper retracement.
Apple Inc. (AAPL) also remains vulnerable. The stock has a larger bear flag, and while it could rally into its unfilled gaps around the product unveiling, the broader pattern stays bearish unless it takes out the previous high.
What to Watch Next
The immediate catalysts are PPI Thursday morning, CPI Friday, and the Federal Reserve decision next week on the 16th.
Beyond that, watch whether oil pushes back toward $94.73, whether the 10 year yield can break its resistance above 4.8%, whether the S&P 500 holds 7570, and whether Bitcoin can defend $77,000.
Bottom Line
This market is being controlled by the relationship between oil, inflation, Treasury yields, and the Federal Reserve. As long as the S&P 500 holds 7570 and Bitcoin holds around $77,000, their larger setups remain intact, but the next inflation reports and the reaction in yields will determine whether those levels continue to hold.