S&P 500’s slip below key technical level may foreshadow deeper setback, LPL says

Trader Jonathan Mueller works on the floor of the New York Stock Exchange, Tuesday, Nov. 18, 2025. (AP Photo/Richard Drew)

The S&P 500’s drop below a closely watched technical threshold could signal a deeper pullback ahead, research from LPL Financial showed on Tuesday, underscoring growing pressure on equities as tech and AI trades unwind globally.

The benchmark index closed below its 50-day moving average on Monday for the first time since April, ending its longest such streak since 2007 and the sixth-longest in the past 75 years, according to LPL.

While the move alone is not historically a sign of sustained weakness, LPL said other short-term indicators have turned more negative.

More defensive sectors are beginning to lead the market for the first time in seven months. Market breadth is also deteriorating, with only 51 per cent of S&P 500 constituents trading above their 200-day moving averages, the firm noted.

The commentary illustrates the severity of the recent sell-off, which has come during a month that is usually favorable for stocks.

Investors are hoping for a blowout quarterly report from Nvidia NVDA.O, which reports earnings on Wednesday, to lift the gloom hanging over equities. The company’s stock is trading 10 per cent below its record high.

Several business leaders and analysts have warned that markets may be vulnerable to a correction over the next year or two, arguing that the AI boom has driven valuations to levels that are increasingly hard to justify.

Moving averages track the market’s average level over a set period, smoothing out day‑to‑day swings. When an index falls below a widely watched moving average such as the 50-day, many investors see it as a sign that momentum is fading.

Such technical signals can help investors judge the depth of pullbacks and offer another frame of reference as they navigate market swings.

However, LPL said resilient earnings, expected interest rate cuts by the U.S. Federal Reserve and U.S. President Donald Trump’s “One Big Beautiful Act” keep the long-term view on equities constructive.

(Reporting by Niket Nishant in Bengaluru; Editing by Shreya Biswas)