Market Analysis Summary
Date: April 29, 2026
US500 Sees Largest Correction Since March
The S&P 500 futures (US500) are currently undergoing a significant pullback, attributed to a hawkish stance from the Federal Reserve during its final meeting chaired by Jerome Powell. Despite Powell's departure, the Fed's hawkish members, including Hammack, Kashkari, and Logan, have emphasized that inflation, driven by energy shocks and rising oil prices, remains a critical concern, preventing any consideration for easing monetary policy.
Investor Concerns
Investors are increasingly worried about internal divisions within the Federal Reserve Committee, which may lead to a more restrictive interest rate policy in the post-Powell era. This uncertainty is particularly impactful as the market braces for upcoming financial results from major technology companies.
Interestingly, the primary source of anxiety on Wall Street is not solely the earnings reports but the substantial capital expenditure (Capex) planned for AI development by these tech giants. There is a growing fear regarding the short-term profitability of these companies amidst their escalating investments.
Capital Expenditure Projections
Alphabet (Google)
Projected 2026 Capex: $175–$185 billion, nearly doubling the previous year's spending of $91.4 billion.
Market Reaction: Investors are on high alert for any signs of downward revisions to these forecasts due to potential impacts on profit margins.
Microsoft
Estimated Capex for the Current Quarter: $35.2 billion.
Management Signals: Indications that spending in the latter half of the year will surpass that of the first half have raised concerns about continued growth in these expenditures.
Key Issue: The absence of proprietary AI chips means that every dollar spent on infrastructure is burdened by high margins from key suppliers like Nvidia.
Meta
Planned 2026 Capex (Mark Zuckerberg): $115–$135 billion, compared to less than $70 billion in 2025.
Total Operating Expenses: Could reach an astonishing $169 billion.
Market Outlook
The current pullback in the US500 is characterized as a "double blow." On one side, a hawkish Federal Reserve limits expectations for cheaper capital, while on the other, Big Tech is entering a phase of unprecedented spending that could deplete cash reserves faster than AI investments yield returns. If upcoming reports confirm that the technological arms race will incur costs exceeding even the most pessimistic forecasts, the support level at 7,100 points on the US500 may face significant testing. Conversely, cutting these expenses could be interpreted by investors as a sign of weakness, making it imperative for companies to demonstrate high returns and a growing user base.
The US500 has been retreating for two consecutive days, potentially marking its largest correction since late March. The last occurrence of two consecutive days of declines was during that period, with the first major support level at 7,100, followed by 7,000 at the 23.6% Fibonacci retracement level.