Everything about breaking through the 7000 mark has been set up! The S&P 500 is gathering momentum to challenge the milestone point.

As a seasonal sharp fluctuation has basically passed, the bullish Wall Street hedge funds and institutional investors are lining up to bet that the S&P 500 index will soar above 7,000 points. The benchmark stock index jumped to a record high of 6,875 points at the close on Monday, mainly boosted by positive signs in the US-China trade, reinforced expectations of interest rate cuts, and significant uplift brought by the upward revision of earnings expectations closely related to artificial intelligence. Against this macro backdrop, some bullish forces emphasize that besides the aforementioned positive catalysts, there are other important factors that can jointly propel the index to break through the significant psychological milestone of 7,000 points. Firstly, the increasingly focused capital flow data in the market shows that retail investors and institutional investors are continuously pouring into the US stock market, and more importantly, technical analysis indicators show that there is very weak resistance at this integer milestone. As a seasonal quirk - September and October are often weak periods for the stock market, however, the past week has been the most favorable week for the stock market in 75 years. Whether it is fundamental expectations, technical aspects, capital flow, or historical flow data, the groundwork has been laid for the S&P 500 index to break through the significant milestone of 7,000 points in the recent trading days. "The catalysts driving the rise in risk assets are not lacking." Michael Romano, head of stock derivatives sales at UBS Securities, wrote in a research report to clients on Sunday. "What was once seen as a 'blue sky limit scenario' of 7,100 points by the end of the year is rapidly becoming the market's base scenario, as the market reflects and prices in next year's upward expectations." For some cautious investors, this optimism will undoubtedly face a stern test this week as five of the "Big Seven Tech Titans" that have been driving the US stock market bull market since 2023 and hold high weightage in the S&P 500 index will announce their earnings after the close of the US stock market on Wednesday and Thursday. In terms of current market profit expectations, analysts and investors are very optimistic about the performance of these tech giants. Options market activity shows that investors widely bet that the performance of these giants will drive the US stock market towards a new bull market trajectory once their earnings are announced. In addition, several major central banks including the Federal Reserve, Bank of Japan, and European Central Bank, among others, will also make monetary policy decisions this week. Investment institutions on Wall Street are charting the path for the S&P 500 index to reach new highs If the earnings of the tech giants shine this week, the US stock market is poised to break through 7,000 points+ and move towards a new bull market Amid renewed major uncertainty in Trump's tariffs policy towards China, the US government shutdown, and the increasing debt of developed countries, the performance disclosure season of US stocks is crucial. From the latest expectations of Wall Street analysts and the disclosed earnings, the "Big Seven Tech Titans" that have high weightage in the S&P 500 index, as well as leading AI computing industry players such as Broadcom and AMD, are expected to show strong performance driving the continuous innovation of the US stock market. Since 2023, the unprecedented AI investment boom has driven the long-term bull market narrative of AI computing power, which is integral to the core logic of the US stock market that is dominated by the "Big Seven Tech Titans" with high weightage and the increasing weightage of tech stocks in the global stock market achieving new highs. Based on current core trend indicators and news flow on AI bull market, it appears that the AI-driven global stock market bull run is far from over. Analysts on Wall Street have been busy raising profit expectations for US companies, especially for leaders in AI computing and tech giants. This has driven a measure tracking the "net revision out of total performance expectation changes ratio" by Yardeni Research to its highest level in four years. The latest reading compiled by Yardeni Research generally reflects the continuously rising optimism of Wall Street analysts regarding profit growth, with the continued positive values - that is, the ratio of upward revisions in the past three months rising - indicating a hot bullish sentiment in the market. The NERI turned positive in August for the first time in nearly a year, as analysts' confidence in profit growth momentum for US companies, particularly in the tech sector, strengthened. Currently, "earnings over macro" holds a core influence in pricing in the global stock market, and confidence in US company earnings is significantly increasing on Wall Street, especially for the tech giants and leaders in the AI computing industry chain, which are going through a period of positive revisions and outperformance. This provides a strong "performance fundamental DRIVE" for the US stock market and even major benchmark stock indices globally to continue hitting new highs. The Federal Reserve's announcement of another interest rate cut this week is almost certain, so if the US stock market can pass this tech giant earnings test, the seasonal factors appear to be very favorable. The last few weeks of the year tend to lean towards the upward valuation of risk assets. According to data from Goldman Sachs' trading department, since 1985, the Nasdaq 100 index has averaged an 8.5% increase from October 20 to the year-end, while the average return of the S&P 500 index is about 4.2%. Looking at more extended and direct historical statistical data, based on UBS data on the S&P 500 index's average return over a week since 1950, the last week of October is often one of the best single weeks for buying stocks. From a technical perspective, analysts also believe that the S&P 500 index still has room to move up. John Kolovos, Chief Technical Strategist at Macro Risk Advisors, said that the next resistance level for the S&P 500 index is near 7,000 points, only 1.8% higher than the Monday close, making the technical breakthrough relatively easier. "That will be a crucial milestone, and if the index successfully breaks through, 7,500-7,700 points will be the next major target level." the strategist said. Alexander Altmann, Global Stock Tactical Strategy Chief at Barclays Bank, believes that the S&P 500 index can reach 7,250 points by the end of this year, citing the core bullish logic that the index has had an average absolute change of about 23% annually over the past five years. The so-called capital flow data also looks very favorable, as the main investor groups are adding fuel to the strong rise in US stocks. Data from Citadel Securities shows that retail investors, accounting for 22% of US stock trade volume, have been net buyers in 23 out of 27 weeks over the past 27 weeks. Stock buybacks by listed companies, which were temporarily paused before the start of the US stock earnings season in mid-October due to regulatory rules, have been approved to resume, as Goldman Sachs' trading team pointed out that the fourth quarter has historically been the most active period for stock buybacks by listed companies. Even cautious hedge funds that have been wary of stock markets at high levels have unexpectedly turned net buyers in the US stock market after massive selling for two consecutive weeks before last week. As last Friday's CPI inflation data was milder than expected, strengthening the bets on continuous rate cuts by the Federal Reserve, they chose to follow the bulls in the stock market and buy stocks. However, this does not mean that the US stock market, which has risen 38% from its April low and pushed tech stock valuations to levels usually seen in market bubble periods, is without risks. Although US company performance has been better than market expectations so far, the earnings of tech giants like Microsoft, Alphabet, Meta Platforms, Amazon, and Apple - which together by market value account for about a quarter of the S&P 500 index - and their core performance indicators and the latest developments in AI and revenue generation processes still pose major uncertainties for the US stock market, despite Wall Street's recent optimism about their earnings and growth driven by AI. "If there are any disappointing signs in earnings, or any questions about whether AI capital expenditures are worth it, I expect investors will punish them quickly." Dave Mazza, CEO of Roundhill Financial Inc. said. On the other hand, this asset management company's CEO mentioned that as Wall Street analysts continue to revise earnings data upward, as long as companies surpass earnings expectations slightly, it could bring the coveted 7,000 point integer milestone to the bulls in just a few days. "These could be the heavyweight sparks that keep this rally burning, if their earnings are strong, the S&P 500 index is likely to touch 7,000 points this week." In terms of longer-term expectations, analyst Julian Emanuel from the well-known Wall Street institution Evercore ISI expects the S&P 500 index to climb to 7,750 points by the end of 2026, driven by the revolutionary AI technology shift, which happens "once in a generation." The potential increase is about 20%. Overall, Emanuel's long-term outlook is more optimistic, emphasizing that the proliferation of AI will drive a double increase in corporate earnings and valuations. Emanuel believes that in this process, a correction of 10% or more in the S&P 500 index is possible, but he considers such corrections as buying opportunities in a structural bull market background. This analyst's prediction of the bull market scenario for the US stock market is even more aggressive: Emanuel predicts that if there is an "AI-driven asset bubble," the S&P 500 index could even climb to 9,000 points.