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
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
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

The Yen Has Lost Its Bullish Momentum

The Consumer Price Index (CPI) in the Tokyo region declined in June from 3.4% to 3.1% year-over-year, marking the first signal so far that may indicate a slowdown in price

Kuvat Raharjo 12:21 2025-06-27 UTC+2

EUR/JPY. Analysis and Forecast

The EUR/JPY pair is regaining positive momentum during today's trading session, reversing its recent decline.The euro continues to benefit from the prevailing sentiment of selling the U.S. dollar

Irina Yanina 12:17 2025-06-27 UTC+2

Inflation in Canada Remains Too High – USD/CAD May Accelerate Its Decline

Inflation in Canada remains too high to expect a rate cut by the Bank of Canada at its upcoming meeting. In April, inflation sharply slowed to 1.7% y/y, and most

Kuvat Raharjo 11:16 2025-06-27 UTC+2

XAU/USD. Analysis and Forecast

Gold is drawing renewed selling interest today after breaking below the key $3300 level. Traders are awaiting the release of the U.S. Personal Consumption Expenditures (PCE) Price Index, which

Irina Yanina 10:47 2025-06-27 UTC+2

PCE Index Data Unlikely to Significantly Impact Market Dynamics (Potential for Renewed Growth in EUR/USD and Bitcoin)

The easing of tensions in the markets, following a pause in the military conflict in the Middle East, supports the return of the previous paradigm—an increase in demand for stocks

Pati Gani 09:52 2025-06-27 UTC+2

The Market Is Off the Leash

Greed has returned to the markets. While professionals warn about the need for caution amid geopolitical uncertainty, trade wars, and the state of the U.S. economy, retail investors are once

Marek Petkovich 09:16 2025-06-27 UTC+2

What to Pay Attention to on June 27? A Breakdown of Fundamental Events for Beginners

There are relatively few macroeconomic reports scheduled for Friday. Some experts refer to the PCE indicator as "important" and "the Fed's favorite," but we do not share that view

Paolo Greco 07:02 2025-06-27 UTC+2

GBP/USD Overview – June 27: History Doesn't Repeat Itself

The GBP/USD currency pair continued its strong upward movement throughout Thursday. Since the beginning of the week, the U.S. dollar has lost "only" 330 pips. As we've previously stated

Paolo Greco 03:41 2025-06-27 UTC+2

EUR/USD Overview – June 27: Can Trump Balance the Trade Deficit?

The EUR/USD currency pair is in a "free rise" (similar to the term "free fall"). The dollar is once again plunging into the abyss, just as we repeatedly warned. It's

Paolo Greco 03:41 2025-06-27 UTC+2

Powell, Trump, and Everyone Else

What will change with the arrival of a new Federal Reserve Chair? This is a rather important question, and the answer to it may already have implications for the U.S

Chin Zhao 00:08 2025-06-27 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.