Written by Antonio Di Giacomo, Senior Market Analyst at XS.com
THE S&P 500 ADVANCES WITH SUPPORT FROM ARTIFICIAL INTELLIGENCE AMIDMACRO AND GEOPOLITICAL CAUTION
The S&P 500 begins the week with a moderate advance, consolidating its position as the primary benchmark for risk appetite on Wall Street. The index reflects a positive, albeit restrained, tone in a market that blends selective optimism with a defensive stance at the start of a year filled with macroeconomic and political factors yet to be defined. This dynamic suggests that investors are maintaining exposure to equities, but with a more tactical and cautious approach.
The S&P500’s performance finds key support in companies linked to artificial intelligence, which continue to lead gains within the index. The structural growth narrative of the technology sector continues to attract flows, particularly toward large- cap stocks that carry significant weight in the index’s performance. This technological leadership has helped offset the weakness observed in more cyclical sectors sensitive to global growth.
Adding to this momentum is the energy sector, which provides stability to the index amid a more tense international backdrop. Recent U.S. action in Venezuela and the capture of President Nicolás Maduro have drawn market attention to the geopolitical front, reinforcing expectations of firmer energy prices and benefiting energy
companies included in the S&P 500.This support acts as a buffer during periods of heightened volatility.
On the technology front, the index is also benefiting from renewed optimism surrounding the Consumer Electronics Show in Las Vegas. Announcements related to innovation, automation, and new applications of artificial intelligence strengthen the perception that the sector’s growth still has room to run. This environment encourages positioning in companies with business models tied to software, advanced hardware, and digital services.
In this context, semiconductor stocks play a central role in the S&P 500’s behavior. Announcements from NVIDIA, delivered by its CEO Jensen Huang, reinforced expectations of sharply expanding demand. This boosted chip and memory companies within the index, lifting overall market sentiment and reinforcing a positive short-term bias.
However, the S&P 500’s advance remains constrained by the monetary backdrop. From the Federal Reserve, official Stephen Miran noted that monetary policy remains restrictive and that rate cuts of more than one percentage point may be required in 2026. This message reinforces the idea that monetary easing will not be immediate and keeps valuations in check.
Finally, investors remain watchful ahead of the U.S. December employment report.
These data will be crucial for assessing the strength of the labor market and for adjusting expectations about the future path of interest rates. Depending on the figures, the S&P 500 could find new catalysts or face additional consolidation.
In conclusion, the S&P500 advances are supported by the strength of the technology sector and the renewed prominence of artificial intelligence, with additional backing from the energy sector amid a more complex geopolitical environment. Nevertheless, caution surrounding monetary policy and upcoming macroeconomic data limits a more forceful short-term move. As a result, the index is navigating a phase of gradual gains and consolidation, awaiting clearer signals to define its direction in the weeks ahead.