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13.05.202610:24 Forex Analysis & Reviews: Big money fuels market rally

Relevancia 03:00 2026-05-18 UTC--4

After a blistering rally, a breather would be welcome. However, to pause, S&P 500 bulls need a trigger that scares them off. If geopolitics cannot do it, inflation might. A rise in US consumer prices to 3.6% forced the broad index to pull back, albeit briefly. Retail investors promptly bought the dip.

In theory, accelerated inflation forces the Fed to tighten monetary policy, creating an unfavorable backdrop for US equities. In practice, the S&P 500 performed strongly in 2023–2025 despite high inflation and elevated fed funds, largely because falling inflation expectations eventually allowed the Fed to pivot to easing in 2025. Today, expectations of future inflation are rising again.

TIPS yields and inflation expectations

Exchange Rates 13.05.2026 analysis

A similar pattern appeared in 2021, but the post-pandemic recovery then supported equities. US stocks only corrected sharply in 2022 once the Fed began hiking in earnest. So equities retain some upside room until the central bank actually starts lifting interest rates. After the April inflation release, the futures market pushed out the expected timing of that first hike from April to March 2027.

Crucially, the S&P needs a durable structural advantage. In 2021, that was rapid post-COVID economic growth. In 2026, impressive corporate profits act as a driver. Q1 results for S&P constituents were the strongest in two decades outside of post-2008 and post-2020 recoveries.

S&P 500 company earnings dynamics

Exchange Rates 13.05.2026 analysis

Still, there is a sour note. The bulk of the gains are concentrated in memory-chip manufacturers. Supply shortages have produced windfall profits for producers and rising costs for consumers, creating a massive divergence and fueling the Philadelphia Semiconductor Index's more than 60% rally over the past six weeks.

Those names also took the biggest hit after April's CPI. Broadcom and Micron Technology were among the top five losers on May 12, underscoring how fragile chipmakers' positions have become. If fears intensify, that bubble could burst.

Exchange Rates 13.05.2026 analysis

For now, however, FOMO dominates the equity market, and the index's dip was immediately bought.

Technically, the S&P 500 pulled back on the daily chart after reaching the first of two previously set long targets at $7,429 and $7,500. A pin-bar with a long lower wick formed. A break of its high near $7,410 would allow buyers to add exposure and move the target up to $7,700.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Marek Petkovich,
Analytical expert of InstaSpot
© 2007-2026
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