By Antonio Di Giacomo,
Financial markets analyst for Latin America at XS – August 28, 2025.
“The S&P 500 continues to defy uncertainty and set new records, reaching the 6,500 point threshold. The rally comes in a context of high volatility, fueled by Nvidia’s recent results and the release of key economic indicators in the United States. These factors have tested the market’s resilience, which, despite some occasional declines, remains positively oriented.
Since the beginning of the month, the index has risen by more than 2.5%, reflecting investors’ confidence despite mixed outlooks. The market’s strength indicates that participants continue to favor stocks, despite a macroeconomic environment that still presents significant risks.
The momentum of previous weeks has been supported by a strong earnings season and optimism surrounding a potential interest rate cut by the Federal Reserve. These expectations have boosted investor morale and supported significant gains in several sectors, particularly in technology.
However, by the end of August, signs of fatigue began to appear. The technology sector, notably Nvidia’s stock, declined after the release of results that, although positive, revealed a slowdown in sales of chips dedicated to artificial intelligence. This raised doubts about the sustainability of the technology rally, a key driver of the S&P 500’s rise.
The Federal Reserve’s monetary policy remains the central factor that will guide the index’s short-term evolution. The upcoming reports on inflation and employment will be crucial in determining whether the central bank will cut rates in September. The market is already anticipating a high probability of such an adjustment, thus reinforcing the optimistic sentiment.
However, persistent volatility serves as a reminder that the calm may not last. The VIX volatility index remains at low levels, but analysts warn that such a decrease could precede sharp shakes. Political tensions surrounding the Fed’s independence also add a new layer of uncertainty.
In this context, investors remain cautious but attentive to opportunities. Dips, although unsettling, could represent attractive entry points for those who believe in the continuation of the upward trend in the coming months, especially if the Fed confirms a more accommodative stance in its monetary policy.
In conclusion, the S&P 500 is at a turning point, torn between historical highs and signs of vulnerability. Corporate results, the performance of the technology sector, and Federal Reserve decisions intertwine in a complex scenario where caution prevails. The outcome will largely depend on upcoming economic data, which will determine whether the index extends its ascent or faces a more pronounced correction.”
Analysis by Antonio Di Giacomo, Financial markets analyst for Latin America at XS
