MW The S&P 500 just flashed a bearish sign - but more damage is being done beneath the market's surface
By Joy Wiltermuth
There's considerable damage being done below the surface of the stock market as oil prices surge, and no end in sight to the Iran conflict
The S&P 500 is holding up on the surface, but the strength that's kept it near record highs is starting to crumble.
The stock market just closed below a key technical level Thursday as rising oil prices delivered back-to-back losses on Wall Street, despite attempts by the White House to calm jitters around the Iran conflict.
The S&P 500 index SPX ended 0.3% lower at 6,606, below its 200-day moving average and at its lowest level since late November. That marked its first close below that key technical level since May 9, 2025. Any slip below that trend can be a bearish sign for equity markets.
"I can't say the bull market is over," said Adam Turnquist, chief technical strategist at LPL Financial. But recent developments could signal more selling to come, especially with previous strength under the surface of the market turning south.
"We are just over 5% off the record high," Turnquist of the S&P 500. "And a lot of people take comfort in that. But when you look at the internals of the market, it gets more concerning."
Within the S&P 500, Turnquist pointed to more than 80% of the communication-services, consumer-discretionary and technology-sector stocks now trading in a downtrend, as well as roughly 76% of financials stocks.
The scales also tipped in favor of more individual declining stocks within the index than gainers, he said.
That opens up the S&P 500 to the possibility of tumbling into a correction of a least 10% from its 6,978.60, closing record on Jan. 27. It also starts the conversation around whether it might slide into a bear market, or a drop of at least 20% from its recent peak.
"The usual suspects of higher oil (CL00) (BRN00) and a longer Middle East conflict continue to dominate trading," said Ryan Detrick, chief market strategist at Carson Group, in a text message to MarketWatch.
Read: Global oil prices ease back from $119 a barrel as Trump tries to soothe markets about Iran conflict
"We are finally seeing signs of capitulation," Detrick said, pointing to put and call ratios in the options market that have been spiking and a lack of sectors unscathed by recent weakness.
In the short term, the 6,500 level for the S&P 500 will be important, said Keith Lerner, chief investment officer at Truist Advisory Services. A break below that may signal more fear coming into the market, he said.
Buying still could return to the megacap tech sector, which could lift markets as they did for a decent stretch after 2022, when market carnage hit after the Federal Reserve dramatically hiked rates to quell inflation.
But for now, the S&P 500 appears stuck in a low-conviction backdrop, while traders wait for more clarity on how high oil might go, or when the Middle East conflict may end.
-Joy Wiltermuth
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(END) Dow Jones Newswires
March 19, 2026 16:14 ET (20:14 GMT)
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