Technically, the stock market is breaking down.

The S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI), and Nasdaq Composite (^IXIC) have all officially fallen below the important 200-day moving average as surging oil prices weigh on investor sentiment (chart below). All three major stock indexes are down in 2026.

“The bull market still deserves the benefit of the doubt, though our work still suggests the corrective phase may not be complete,” Truist chief investment officer Keith Lerner said.

Why is the 200-day moving average so important, you are wondering?

Traders widely consider the 200-day moving average to be the “ultimate trendsetter” in financial markets. It represents the average closing price of a stock or indexes over the past 200 trading days, effectively smoothing out daily “noise” to reveal the long-term trajectory.

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When markets or a stock fall below this level, it’s viewed as a major shift in investor sentiment.

In the current backdrop of volatile oil prices leading to uncertain outlooks for corporate profits, it’s hard to see the immediate catalyst for the major indexes to climb back above the 200-day moving average.

Sources have told me that even if the US war on Iran is wrapped up soon, elevated oil prices could be here to stay, and interest rate cuts from the Federal Reserve may not happen at all this year.

That’s a big shift in the investing dynamic compared to the start of the year.

“Until there are some material developments in the war that allow a reopening of tanker transit through the Strait of Hormuz, oil prices will almost certainly remain elevated. That will keep the fear quotient in markets foremost in mind, and that will keep the fear bid in risk assets alive and thriving,” Sevens Report Research founder Tom Essaye pointed out.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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