About 82% of SPY’s net gain over three months was delivered by Microsoft (MSFT) and Nvidia (NVDA), Freedom analysts calculated. Such concentration makes the U.S. market vulnerable to a correction in the largest technology companies. Experts Mikhail Denislmov, Yuriy Ichkitidze, and Vadim Merkulov outlined a base range for the S&P 500 for the week of October 5–9 at 7600–7800 points.
Analysts view a decline toward 7600 points as an opportunity for phased purchases, provided bond yields stabilize. Technology companies remain the backbone of the portfolio, and to broaden allocations beyond this sector Freedom highlights industrials and healthcare.
Technology offsets declines in other sectors
SPY is an exchange-traded fund that tracks the S&P 500. In this index, a company’s influence depends on its market capitalization, so the largest issuers can support its rise even when a significant portion of other stocks is falling.
Over three months, SPY returned 3.59%. The technology sector contributed 4.76 percentage points of that result, while the combined contribution of the other sectors was negative—minus 1.17 percentage points.
At the time of preparing the review, the equal-weight version of the S&P 500, in which all companies have the same weights, had been falling for seven consecutive weeks. In Freedom’s view, an end to this streak would be the first sign of a broader market recovery.
High bond yields hinder the recovery
Cooling in the labor market reduced expectations of an October Fed rate hike, but did not produce a sustained drop in long-term government bond yields. Analysts note that a pause by the regulator is already largely priced into asset prices.
Therefore, the review highlights as key events of the week auctions of 10-year Treasuries totaling $39 млрд and 30-year Treasuries totaling $22 млрд, as well as the publication of the minutes from the Fed’s September meeting. Demand at the auctions should show whether investors are willing to buy long-duration debt under current conditions.
Another indicator is services-sector business activity indexes. For equities, the most favorable combination is resilient demand and slowing cost growth.
Buying at 7600 points depends on market conditions
Freedom suggests spreading new purchases over time. If the S&P 500 declines toward 7600 points, a key condition remains the stabilization of bond yields.
If oil, yields, and credit risk premiums rise simultaneously, the lower bound of the forecast range becomes a less convincing entry guide. A move above 7800 points, by contrast, will be more reliable if supported by a recovery in the equal-weight index, rather than only by gains in a few of the largest names.
Industrials and healthcare will help broaden the portfolio
In industrials, analysts single out electrical equipment manufacturers and companies building energy and engineering infrastructure. They are supported by sustained demand and upward revisions to profit forecasts. In healthcare, the case for a rebound is tied, among other things, to improving profitability in the insurance business and a slowdown in the growth of hospitals’ labor costs.
Within the technology sector, Freedom highlights memory and networking equipment makers that are benefiting from capacity shortages. At the same time, after strong gains in certain segments of equipment and data-storage devices, a correction is possible.
Freedom has previously warned about the S&P 500’s high dependence on the largest companies. In the September review, gains in the standard index were accompanied by declines in its equal-weight version, which was one of the reasons for a neutral short-term outlook.
An additional risk is the cost of financing. Freedom noted that increased borrowing to develop AI is adding pressure to the debt market. In the new review, analysts warn: worsening capital-raising conditions may also affect tech leaders if it becomes harder for customers to finance computing infrastructure.
Not an individual investment recommendation.