empty
02.04.2025 09:16 AM
The Market Needs Proof

It's too late to be afraid. Rumors are circulating in the market that the White House may implement a universal 20% levy instead of reciprocal tariffs—pushing the average import duty to its highest level since the 1930s and triggering a global economic shock. Yet, the S&P 500 remains surprisingly calm and resilient on the eve of America's "Liberation Day." Why? And how will the broad stock index react to the event of the year?

There are several explanations for the S&P 500's resilience. Investors are confident that Donald Trump won't go too far. He is unlikely to pursue a tariff policy so aggressive that it would threaten U.S. economic growth. Investors must see more signs of a cooling U.S. GDP to continue selling the broader index. Finally, greater clarity on import tariffs will reduce uncertainty, which is good for stocks.

S&P 500 Trends and Forecasts

This image is no longer relevant

It's no surprise that while major banks and firms are lowering their forecasts for the S&P 500, they still expect the index to rise by year-end. Yardeni Research now sees a target of 6000 by the end of 2025, down from 6400; Societe Generale forecasts 6400 instead of 6750; and Goldman Sachs lowered its outlook to 5700 from 6200.

UBS Wealth Management believes the worst will happen in the short term, but tariffs will gradually be rolled back by midyear amid negotiations and concessions from other countries. This would create ideal conditions for a renewed uptrend in the S&P 500 between July and December. That scenario seems plausible—but what if other nations don't bend to the White House's demands? They could redirect exports elsewhere, with the U.S. ultimately suffering.

Indeed, the experience of Trump's first trade war with China shouldn't be used as a template. Back then, Washington's allies were largely supportive, and fiscal stimulus helped supercharge the U.S. economy just before the tariffs were implemented. A key difference now is the significantly higher spike in trade policy uncertainty compared to eight years ago.

U.S. Trade Policy Uncertainty Index Trends

This image is no longer relevant

This image is no longer relevant

According to the U.S. administration, tariffs will take effect the day they're announced. The S&P 500's reaction will largely depend on the scale of those tariffs. Only across-the-board 20% levies are likely to shake the index. On the other hand, reciprocal tariffs targeting a group of countries could trigger a rebound in U.S. equities as investors rush to buy the dip.

From a technical perspective, the S&P 500 continues to form a Double Bottom pattern on the daily chart. A breakout above the 5670 resistance level would provide an opportunity to build long positions opened during the drop toward the lower end of the 5500–5790 trading range. Conversely, if bulls fail to break through fair value resistance, it would signal weakness.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Igor Kovalyov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Market fears nothing

The S&P 500 reached another all-time high, with rotation being the hallmark of the US equity market. Investors are aggressively buying up stocks that underperformed in the first half

Marek Petkovich 10:50 2025-07-11 UTC+2

What to Watch for on July 11th? A Fundamental Overview for Beginners

There are very few macroeconomic publications scheduled for Friday, but the volume is still greater than on any previous day this week. The UK will release GDP and industrial production

Paolo Greco 08:50 2025-07-11 UTC+2

GBP/USD Overview on July 11, 2025

The GBP/USD currency pair failed to consolidate above the moving average on Thursday, so the correction continues for now. Throughout Thursday, the GBP/USD pair was unable to hold above

Paolo Greco 07:15 2025-07-11 UTC+2

EUR/USD Overview on July 11, 2025

The EUR/USD currency pair spent Thursday calmly drifting lower. We continue to wait for the current correction to end and for the uptrend to resume. To be fair, this correction

Paolo Greco 07:08 2025-07-11 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are maintaining positive momentum for the second consecutive day. Ongoing uncertainty surrounding U.S. President Donald Trump's trade policy and its impact on the global economy continues to weigh

Irina Yanina 19:24 2025-07-10 UTC+2

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.