S&P 500 Index Forms a Risky Pattern Ahead of the Nvidia Earnings

Key Insights

• The S&P 500 Index has formed a bearish divergence chart pattern.
• It has also formed a rising wedge chart pattern, pointing to a retreat.
• NVIDIA, its biggest constituent, will publish its financial results.

The S&P 500 Index has moved sideways in the past two months as valuation and geopolitical risks have remained. It was trading at $6,890, down a bit from the year-to-date high of $7,020. It has now formed several bearish patterns, pointing to an eventual bearish breakout after the upcoming Nvidia earnings.

Nvidia Earnings to Impact the Broader Stock Market

The S&P 500 Index has been stuck in a narrow range in the ongoing corporate earnings season. The season itself has been highly successful, with data compiled by FactSet showing that the index has had an earnings growth of 13.3%. It was the fifth consecutive quarter of double-digit growth.

The index will be in the spotlight this week as Nvidia, the biggest constituent company, publishes its financial results. These numbers are important because of its higher weighting in the index.

Additionally, Nvidia has become the barometer of the booming artificial intelligence (AI) industry, where it provides the most advanced chips. As such, a strong revenue and earnings report, together with strong guidance will be a sign that the AI boom is continuing.

Wall Street analysts anticipate the upcoming results to show that the revenue jumped to between $65 billion and $70 billion. Also, its earnings-per-share (EPS) are expected to soar by nearly 50%.

These results come at a time when there are jitters about how the AI boom will impact key industries. For example, software companies like Salesforce, Workday, Intuit, and The Trade Desk have all tumbled in the past few months as worries of AI disruption soar.

Other industries like wealth management, insurance brokerage, and even real estate names have tumbled amid the ongoing threat of AI.

Other Key Earnings to Watch

In addition to Nvidia, more companies will impact the S&P 500 Index in the near term. A key one is Salesforce, which will publish its numbers on Wednesday.

Salesforce, one of the best-known software companies, has slumped by over 50% from its highest point in 2025 amid concerns that AI will disrupt its business. Therefore, its results will provide more information on whether this AI disruption issue is real.

More S&P 500 constituents will publish their financial results this week. The most notable ones are firms like Lowe’s, Synopsys, TKO Group, Zoom Communications, Intuit, Dell Technologies, Monster Beverages, and Warner Bros. Discovery.

Geopolitical Risks May Hit US Stocks

Meanwhile, there are still elevated risks that the geopolitical risks will hit the stock market. The main risk is the potential US attack on Iran. Odds of an attack have jumped on key marketplaces like Polymarket and Kalshi.

These odds jumped as Trump continued to accumulate naval power in the Middle East. They include two aircraft carriers, cruisers, and many destroyers.

At the same time, Iran has noted that it will not capitulate to other US demands, including on its ballistic missile program and its support for its allies in the region.

A new war in the Middle East would dent the stock market by boosting volatility. It would also lead to higher inflation by boosting crude oil prices, as Iran has threatened to shut the Strait of Hormuz.

The other risk is on Trump’s tariffs. After the Supreme Court ruled against Trump’s tariffs, the president announced new provisional tariffs on all goods entering the US. He then launched a series of tariffs, which he will announce in the next few months.

S&P 500 Index Technical Analysis

The daily chart shows that the S&P 500 Index has remained in a tight range in the past few weeks. A closer look shows that it has formed a triple-top pattern, a common bearish reversal sign in technical analysis.

It has also formed a rising wedge pattern, which is made up of two ascending and converging trendlines. Also, as the MACD and the Relative Strength Index shows, it has formed a bearish divergence pattern.

These patterns point to more downside in the near term. That retreat may see it drop to the key support at $6,500. The bearish outlook will become invalid if it rises above the all-time high of $7,017.

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