Peter Smith
⬤ The S&P 500 (SPX) and the Nasdaq-100 have both pulled back from recent highs as the Iran war starts to weigh on global market sentiment. Market strategist Ed Yardeni raised his meltdown probability to 35%, up from 20%, pointing to surging oil prices and rising geopolitical risk. SPX S&P 500 Gains 0.8% After CPI But Fails to Hold already flagged growing hesitation in equity momentum following macro data releases.
⬤ Crude oil climbing above $100 per barrel is the key driver behind the shift in outlook. Higher energy costs threaten to reignite inflation and slow economic growth, which in turn reduces the odds of near-term Federal Reserve rate cuts. As a result, the probability of a so-called melt-up rally in the S&P 500 (SPX) has been cut to just 5%.
⬤ Despite the pressure, the S&P 500 (SPX) is holding up better than most global markets. The Bloomberg Dollar Spot Index has strengthened as investors rotate into U.S. dollar safety. The broader uptrend that started in 2025 remains largely intact, though the pullback from peak levels is becoming harder to ignore. BTC, S&P 500, and Gold All Drop Below Key Levels in a Synchronized Risk-Off Sell-Off captures how cross-asset volatility is spreading beyond equities.
⬤ Even within this uncertainty, Yardeni maintains a 60% probability for his long-term "Roaring 2020s" growth scenario. Geopolitical conflict, elevated energy prices, and shifting Fed expectations are all reshaping sentiment around the S&P 500 (SPX), but the structural bull case has not been abandoned.
Peter Smith
