S&P 500, Nasdaq on the Brink of 'Death Cross'

April 9, 2025 — U.S. equity markets are teetering on the edge of a classic technical warning sign: the “death cross.” Both the S&P 500 and the Nasdaq Composite are nearing levels where their short-term momentum indicators could signal a potential shift in trend—from bullish to bearish.

What is a Death Cross?

A death cross occurs when an index’s 50-day moving average falls below its 200-day moving average. Often regarded as a bearish indicator, the death cross suggests that recent declines have dragged prices low enough to overwhelm long-term support, potentially foreshadowing more pain ahead.

While the death cross is not a guaranteed predictor of a prolonged downturn, it is a red flag that many traders and institutional investors monitor closely—particularly when macroeconomic conditions are uncertain.

Where Things Stand

As of Wednesday’s market close:

• The S&P 500’s 50-day moving average sits just 0.4% above its 200-day trendline.

• The Nasdaq Composite’s 50-day average is 0.6% away from a cross below the 200-day.

If current market weakness persists, both indexes could trigger a death cross within the next several sessions. The last time both indexes confirmed a death cross simultaneously was in late 2022, amid recession concerns and aggressive Fed tightening.

Market Context

Recent weeks have seen equities retreat from their all-time highs as investors digest a mix of hawkish Fed commentary, sticky inflation data, and a tepid start to Q1 earnings season. While the broader economic outlook remains mixed, volatility has increased, and the VIX—Wall Street’s “fear gauge”—has climbed above 20 for the first time since October.

Tech stocks, which had led the 2024 rally, are now underperforming, with names like NVIDIA, Apple, and Alphabet all down over 10% from recent peaks. Meanwhile, yields on the 10-year Treasury note have edged back above 4.5%, tightening financial conditions and adding further pressure to growth stocks.

Should Investors Be Worried?

Historically, a death cross can precede deeper declines—but not always. In some cases, it’s simply a lagging indicator reflecting damage that’s already been done. According to research from LPL Financial, the S&P 500 has posted mixed returns following a death cross: averaging a loss of 0.4% over the next three months, but gaining 4.8% over the next six.

“Technicals like the death cross are more useful as a signal of momentum loss rather than a call to panic,” said Diane Roth, chief market strategist at Bayline Capital. “That said, in combination with weak earnings guidance and geopolitical risks, it adds another layer of caution.”

What to Watch

Investors will closely monitor upcoming data releases—including next week’s CPI and PPI reports—as well as commentary from Fed officials and key corporate earnings (Tesla, JPMorgan, and Netflix are among the big names reporting soon).

If markets continue their slide, expect renewed debates over whether the long-anticipated correction has finally arrived—or if this is just another buying opportunity in a still-resilient bull market.