S&P 500 Stocks Just Signaled a Death Cross. Don't Panic.

By Al Root

S&P 500 charts this past week signaled a "death cross," which can be a bad sign, if not necessarily a disaster. A death cross is a trading term for when a shorter-term moving average crosses over a longer-term moving average. In this instance, the 50-day moving average fell below the 200-day moving average, suggesting a market losing momentum.

On Tuesday, the S&P 500's 50-day moving average fell to 5748, below the 200-day moving average of 5754. This was the first death cross since March 2022, when the Federal Reserve started raising rates to tame inflation. A month later, the S&P 500 was 5% lower; six months later, 7%. The maximum drawdown in that six-month span was about 12%.

The 50-day moving average crossed back above the 200-day in February 2023. That's known as a "golden cross." The S&P 500 was up about 5% a month later, and up 9% six months later. Stocks never go in a straight line, though. The maximum drawdown over that six-month span was some 8%.

Investors shouldn't overreact. "Death crosses often occur after most of the technical damage has been done," says ChartSmarter founder and market technician Douglas Busch. "Kind of rearview mirror reflection." Fairlead Strategies founder Katie Stockton calls it a "lagging indicator, " and not a reliable device for market timing. Investors with longer horizons should keep in mind that in the past 20 death crosses, the S&P 500 was higher 80% of the time a year later, says Dow Jones Market Data.

Write to Al Root at allen.root@dowjones.com

Last Week

Markets

President Trump on Monday exempted — for now — some consumer electronics from tariffs and gave auto makers a break on auto parts. Stocks rose. China, powered by pretariff exports, grew 5.4% in the quarter, beating expectations. Trump then slapped controls on high-end chips to China, Federal Reserve chief Powell warned of inflation, gold rose, and stocks and the dollar fell hard. Trump talked of "terminating" Powell. On the holiday-shortened week, the Dow industrials fell 2.7%; the S&P 500, 1.5%; and the Nasdaq Composite, 2.6%.

Companies

Meta Platforms' antitrust trial began, and a judge ruled that Alphabet's Google "willfully monopolized" online ads. China shut off delivery of Boeing planes, U.S. aircraft parts, and American beef. Harvard professors sued over Trump withholding grants; the White House froze $2.3 billion more and asked the IRS to revoke Harvard's tax-exempt status. Goldman Sachs traders had their best-ever quarter. Luxury giant LVMH reported a bigger-than-expected sales decline; Hermès edged ahead in market cap. Trump export controls targeted Nvidia's H20 and Advanced Micro Devices' MI308 chips.

Deals

Elliott Management took a $1.5 billion stake in Hewlett Packard Enterprise, and Bill Ackman's Pershing Square upped its Hertz stake to nearly 20%...Lowe's said it was buying Artisan Design Group for $1.33 billion in cash...Intel said it sold Silver Lake 51% of its programmable-chip unit Altera, valuing it at $8.75 billion.

Next Week

Tuesday 4/22

More than 100 S&P 500 companies, or 22% of the index's components, report financial results this week, headlined by Tesla on Tuesday. Shares of the electric-vehicle company are down 40.2% this year as sales fell. In the first quarter, Tesla delivered 13% less vehicles than a year ago. Investors will also watch for updates on CEO Elon Musk's position in the Trump administration, the impact of tariffs on prices, sales in China and the U.S., and timelines for robo-taxis and a new lower-cost model.

Thursday 4/24

Alphabet will kick off Big Tech earnings after the market close on Thursday. Wall Street expects Google's parent to announce earnings of $2.01 a share on sales of $89.3 billion. A year ago, the company reported earnings of $1.89 a share on sales of $80.5 billion. Last week, a federal judge ruled that Google violated antitrust law. It follows a previous antitrust case that Alphabet lost in August.

Commentary from telecoms including T-Mobile US on Thursday may include hints about the impact of tariffs on Apple. Management may discuss whether they are seeing customers upgrade phones in anticipation of expected price hikes. The White House recently announced a temporary exemption on some tariffs for iPhones and other consumer tech.

The Numbers

12 K

The backlog of U.S. companies controlled by private-equity firms, some 3,800 held for five to 12 years.

$90 B

The possible hit to U.S. tourism this year, estimated by Goldman Sachs, a hit of 0.3% to gross domestic product.

8%

The drop in the ICE U.S. Dollar index so far in 2025, the worst start to a year in the index's 40-year history.

$10 T

How much government debt--$2 trillion new, $8 trillion rolled over--the Treasury must issue this year.

Write to Robert Teitelman at bob.teitelman@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.