21.05.202512:41 Forex Analysis & Reviews: US market pulls back. Correction in sight?

S&P 500

Overview for May 21US market pulls back. Correction in sight?

Major US indices on Tuesday: Dow -0.3%, NASDAQ -0.4%, S&P 500 -0.4%.S&P 500: 5,940, trading range: 5,400-6,200.

The S&P 500 had logged six consecutive winning sessions, but on the seventh day, it slipped.

There was no upside yesterday. The stock market entered a consolidation phase following a strong rally from the April 7 lows. The Dow and Nasdaq followed suit, posting modest losses, while the Russell 2000 held flat.

There were no significant US economic data releases to sway markets, and corporate news was limited.

Additional attention was directed toward President Trump's visit to Capitol Hill, where he met with Republican House members to discuss his budget reconciliation bill. Reportedly, he advised against touching Medicaid cuts and rebuked the SALT Caucus's push to raise the deduction cap above the currently proposed $30,000, telling them to "leave it."

There was some talk that neither side was fully convinced by the president's appeals, adding a layer of uncertainty around the reconciliation bill that contributed to the market's corrective tone.

Overall, there was little conviction behind Tuesday's selling pressure.

Eight of the eleven S&P 500 sectors closed in the red, though only one—energy (-1.0%)—posted a loss of at least 1.0%. Declines across the other sectors ranged from 0.2% to 0.8%. The three advancing sectors—utilities (+0.3%), healthcare (+0.3%), and consumer staples (+0.2%)—reflected a more defensive posture.

Market breadth tilted negative.

Decliners led advancers by an 8-to-5 margin on the NYSE and by about 11-to-10 on the Nasdaq. Dow component Home Depot (HD 377.05, -2.21, -0.6%) was among the laggards, slipping after a mixed Q1 report that showed a drop in EPS, a revenue beat, reaffirmed FY2026 guidance, and a statement that the company does not plan to raise prices in response to tariffs.

Alphabet (GOOG 165.32, -2.55, -1.5%) was another notable decliner following its I/O event. Meanwhile, Tesla (TSLA 343.82, +1.73, +0.5%) made the advancers list but closed far below its session high of $354.98.

Mega-cap stocks were generally weaker, in line with a corrective tilt, though they showed some late-session strength that helped indices recover from deeper losses. The Vanguard Mega-Cap Growth ETF (MGK) fell 0.5% after being down as much as 1.2% during the day.

Energy: Brent crude at $66.20, up roughly $1 over the past 24 hours.

Conclusion: The US market posted its first decline in a considerable stretch. We anticipate a further correction and are preparing to buy on a pullback in the S&P 500 towards key moving averages, around the 200-, 100-, and 50-day marks.