Freedom: the S&P 500 could reach 8,000 points, but the market’s advance remains narrow

Freedom analysts assess the risk balance for the U.S. market as moderately positive and look for the S&P 500 to trade in the 7,690–8,000 range over the next two weeks. As of October 6, the base case remains further gains as long as the index holds support around 7,680–7,690. 

Details are available in Freedom analysts’ two-week review of the U.S. market.

The S&P 500 reflects the performance of the largest publicly traded U.S. companies. However, the index’s resilience does not always mean most of its constituents are rising: large-cap companies have a stronger impact on its level.

Technology sector supports the indexes

Freedom experts believe the U.S. market’s positive performance has once again been concentrated in a limited number of companies. Over the two weeks in question, only 35.6% of S&P 500 members posted gains.

About half of the index’s stocks traded above their 200-day moving averages, while fewer than a third were above their 50-day averages. At the same time, 51% of companies were more than 20% below their all-time highs, and 35% were more than 30% below.

In analysts’ view, these metrics point to limited participation by issuers in the uptrend. The market’s main support came from the technology segment, while most other sectors ended the period lower.

Buyers of tech stocks were supported by the outcomes of a meeting between White House representatives and executives of the largest companies. The parties agreed on voluntary AI safety standards, and the U.S. President confirmed support for expanding data centers. Experts viewed this as a signal that increased oversight does not yet imply a slowdown in the development of AI infrastructure.

Toshiba’s plans raise concerns among storage and memory makers

Positivity within the technology sector was unevenly distributed. Shares of Seagate (STX), Micron (MU), SanDisk (SNDK) and Western Digital (WDC) fell amid reports that Toshiba plans to roughly double production of hard drives for data centers by fiscal 2027 versus the 2025 level. Investors fear that increased supply will eventually ease the shortage and limit manufacturers’ ability to raise prices.

Freedom analysts emphasize that Toshiba’s capacity increase directly affects Seagate and Western Digital, which specialize in hard drives. Pressure on DRAM and flash memory makers is indirect and does not imply confirmed growth in supply of their products. These companies’ profit forecasts have not changed so far.

Inflation and weak hiring strengthen the case for a Fed pause

Data published on September 30 showed that the headline PCE price index in August rose 0.31% month over month, while the core measure increased by about 0.25%. Both results came in below consensus forecasts.

After data revisions, average monthly core inflation over the three summer months came to 0.17%—around 2% on an annualized basis. Experts estimate this weakens the case for further Federal Reserve rate hikes.

The September jobs report also came in weaker than expected: the economy added 29 thousand nonfarm jobs versus the 90 thousand forecast. The prior two months’ figures were revised down by 66 thousand.

Average hourly earnings rose 0.13% month over month, and the year-over-year increase slowed to 3%. Analysts believe the report confirms weak hiring with no signs of overheating, but does not point to a sharp deterioration in the economy. At the time of the assessment, the probability of holding the rate steady at the October meeting was about 80%.

High rates weigh on banks and dividend stocks

For the financial sector, a key risk remains the narrowing spread between 10-year and 2-year Treasury yields compared with the start of the year. A flatter yield curve can pressure banks’ net interest margins, especially if deposit costs rise faster than loan yields. Therefore, experts suggest watching banks’ ability to control funding costs.

For utilities and real estate, higher rates mean higher costs of servicing debt and funding new investment. At the same time, bonds intensify competition with dividend stocks.

At the same time, analysts note that Fed tightening in itself does not necessarily mean an inevitable broad-market decline. The scale of rate increases and their impact on the economy and corporate results matter.

Which S&P 500 levels analysts are highlighting

As of October 6, the S&P 500 rose to 7,800 and held above its 20- and 50-day moving averages. The RSI indicator reached 60, which, according to Freedom, confirmed upward momentum with no signs of overbought conditions.

A break above the August high could open the way to 8,000. Key support lies in the 7,680–7,690 zone: a breakdown would increase the probability of a correction toward 7,510.

Investors’ additional attention will focus on corporate results. Freedom highlights JPMorgan Chase (JPM) earnings scheduled for October 13 and Netflix (NFLX) on October 20. For the bank, the net interest income outlook and loan book quality are important; for Netflix, advertising revenue, subscriber reaction to pricing, and content spending.

Not an individual investment recommendation.