Recently, the S&P 500 index and its largest ETF product, VOO, have fallen for three consecutive trading days, reaching their lowest level since November of last year. As a benchmark index tracking the largest publicly traded companies in the U.S., the S&P 500 has now dipped to 6,637 points, a cumulative decline of over 5.2% from its yearly high.
This pullback is closely related to the escalating tensions in the Middle East. Geopolitical risks have driven up global oil prices, with Brent crude and West Texas Intermediate crude briefly surpassing $115 per barrel. Although prices have since retreated, the high volatility continues to exert pressure on market sentiment. As a result, U.S. Treasury yields have risen in tandem, with the 10-year yield climbing to 4.17% and the 30-year yield reaching 4.766%, reflecting investor expectations that the Federal Reserve will maintain a tightening stance this year.
In a recent research report, JPMorgan pointed out that if the Middle East conflict persists, the S&P 500 index could enter a technical correction zone—defined as a 10% drop from its peak, with a target level potentially falling to 6,300 points, the lowest since August of last year. The report also emphasized that if there are clear signs of de-escalation in the conflict, the current downside risks would significantly diminish, as the overall macroeconomic fundamentals still support risk assets.
Another well-known research institution, Yardeni, has also raised the probability of a market crash from 20% to 35%, indicating heightened concerns among institutions regarding short-term volatility.
The next key market event will be the release of the U.S. Consumer Price Index (CPI) data for February this Wednesday. The market generally predicts that the overall CPI year-on-year growth will rebound to 2.5%. If the actual data exceeds expectations, combined with high oil prices, it may further reinforce expectations of persistent inflation, impacting the Federal Reserve's policy path.
Additionally, Oracle's earnings report, set to be released on Tuesday, is also drawing attention. As a significant player in the artificial intelligence sector, Oracle holds a crucial position in AI infrastructure with its substantial software order backlog, and its performance may provide sentiment guidance for the tech sector.