The stock market continues to absorb blows from the U.S.-Iran war. The S & P 500 is up more than 1% week to date, and the Cboe Volatility Index (VIX) has eased to around 23 from a high above 35. The benchmark is not overextended in either direction either. The 14-day relative strength index (RSI) sits at 42 — neither oversold (below 30) nor overbought (above 70). Frank Cappelleri, founder of CappThesis, said this is the lowest RSI reading for the S & P 500 on a Fed decision day since March 2025. Back then, the RSI stood at 37. “At that time, the market was in the middle of a countertrend bounce after the SPX had declined 11% from the February peak to the early March low,” Cappelleri wrote. “While there was an initial pop after that Fed meeting a year ago, it proved short-lived and gave way to the second, more aggressive leg lower that ultimately resulted in a 20% two-month decline,” in the wake of the U.S. tariff campaign, he said. This time around, even a short-term pop seems unlikely. The Fed isn’t expected to cut its overnight lending rate Wednesday. On top of that, few changes are expected in the central bank’s summary of economic projections , which forms the basis for the Fed’s so-called dot plot and shows where officials expect rates to move in the future. A look at the S & P 500’s RSI chart shows the market has quickly lost momentum this year. RSI peaked at around 63 in January. To be sure, “this is just one piece of the puzzle,” Cappelleri wrote to clients, and the S & P 500 remains only about 5% below its all-time high reached in late January. But now, many across Wall Street are expecting a big decline before the market resumes its upward trajectory: Morgan Stanley trading desk: “Unfortunately, we are still waiting for a more prototypical clearing event – and that is despite [Treasury Secretary Scott Bessent’s] steady hand, [Nvidia CEO Jensen Huang] expanding forward, and little evidence of demand destruction.” Goldman Sachs’ Tony Pasquariello (global head of hedge fund coverage): “I worry the stock market is underestimating the potential downside tails … The market is certainly smarter than I am, but I’m surprised that market participants aren’t more concerned.” Bank of America’s Michael Hartnett (strategist): Noted Tuesday that many of the bank’s sentiment indicators are still not bearish enough to signal an end to the selling.