Key Takeaways:

• The S&P 500 faces renewed volatility as fresh tariff uncertainty weighs on investor confidence.
• Nvidia earnings on Wednesday could determine whether the index breaks higher or pulls back.
• A move above 7,002 would signal strength, while 6,720 remains key downside support.

The S&P 500 has entered a more fragile phase after a strong run in 2025, with investors now evaluating renewed tariff tensions, policy uncertainty and an important earnings test from Nvidia on Wednesday. The benchmark S&P 500 has started to wobble from the onset of 2026, reminding investors that record levels rarely come without resistance.

Tariffs Back in Focus After Supreme Court Ruling

Volatility picked up following a decision by the Supreme Court of the United States to strike down President Donald Trump’s use of emergency powers to impose sweeping tariffs. Rather than calming markets, the ruling introduced a new layer of uncertainty.

President Trump responded by invoking Section 122 of the Trade Act of 1974, announcing a temporary global tariff of 15% for up to 150 days. While this replaces the earlier emergency measures, it does not settle the broader issue. Congress could extend the tariffs, legal challenges could re-emerge, and trading partners are already asking for clarity.

For the S&P 500, this is important because tariffs affect margins, supply chains and consumer prices. Even when companies can pass on costs, profit expectations become harder to forecast. Markets tend to discount what they can measure. When the rules keep changing, investors demand a higher risk premium.

The good news is that markets are not experiencing the initial shock seen during the first round of tariff escalation. The bad news is that businesses are once again operating without firm guidance on trade policy heading into the second half of the year.

Federal Reserve Policy Remains a Key Support

Investors are also watching the Federal Reserve closely. Governor Christopher Waller recently indicated that tariff-driven price increases may not significantly alter his view on monetary policy. That comment suggests the Fed is unlikely to overreact to short-term price pressures caused by tariffs.

Interest rates remain a central pillar for equity valuations. If inflation stays contained and the Fed continues to signal rate cuts later this year, it could provide a cushion for the S&P 500. Lower borrowing costs would help support earnings multiples, particularly in growth-oriented sectors.

However, the central bank is walking a fine line. If tariffs begin to feed into broader inflation or weaken demand, policymakers may have fewer options. For now, the market appears to believe that rates will trend lower, but confidence in that outlook could be tested quickly by incoming data.

S&P 500 Faces a Key Test with Nvidia Earnings

All eyes now turn to earnings from Nvidia, which reports today after the bell. The company has become one of the most influential stocks in the index, and its results often set the tone for technology shares and broader market sentiment.

Expectations are high with consensus estimates pointing to earnings per share of $1.52 on revenue of $65.56 billion for the fiscal fourth quarter. That would mark a sharp increase from the same period a year ago, when Nvidia posted earnings per share of $0.89 on revenue of $39.33 billion.

The fourth quarter results are expected to be strong, but forward guidance would be much more important. Investors want confirmation that demand for advanced AI chips remains strong and that capital spending by major technology firms continues at pace. Given Nvidia’s significant weighting in both the S&P 500 and the NASDAQ Composite, any surprise could move the broader market.

A strong report would likely reinforce confidence in large-cap technology and help stabilise recent weakness in software and semiconductor stocks. A disappointment, however, could trigger a broader pullback, especially given how much optimism is already reflected in valuations.

This earnings release is not just about one company. It is a test of whether the growth assumptions embedded in the index remain justified.

Source: TradingView. S&P 500 daily price chart as of 25 February 2026.

Elevated Valuations and Policy Risks Test the S&P 500 Rally

The S&P 500 is not showing signs of reversal of the primary bull trend, but it is facing more crosscurrents than earlier in the year. Trade policy remains fluid. Monetary policy is still data dependent. Corporate earnings are being scrutinised more closely.

Valuations are elevated, which leaves less room for policy errors or earnings misses. At the same time, the U.S. economy continues to demonstrate resilience, and large-cap companies remain highly profitable and globally diversified.

The index is entering a period where selectivity is more important than simple index exposure. Volatility may increase after Nvidia earnings on Wednesday and if a deal between Iran and the U.S. on uranium enrichment is not reached on Thursday.

If Nvidia delivers and tariff tensions stabilise, the S&P 500 could regain its footing and break above its multi month resistance of 7,002 points. Such a breakout would be a bullish development and would signal a likely extension of the rally to 7,200 over the next few months. If uncertainty deepens on either front, investors should be prepared for further consolidation and possibly a decline to 6,600, before the next leg higher takes place.

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