empty
05.03.2025 01:30 PM
Market may rebound after series of falls

The rally did not last long, and neither did the S&P 500. From the US presidential election to its February highs, the broad stock index gained over $3.4 trillion in market capitalization. However, Donald Trump wiped out these gains by imposing 25% tariffs on Mexico and Canada, forcing investors to pull their money out. The stock market returned to where it was when the Republican won. Does this leave room for a deeper correction?

As the S&P 500 kept moving downwards, investors speculated on when the White House would throw it a lifeline. Some believed it would happen when the index dropped back to pre-election levels. Others pointed to a 10% decline, recalling similar patterns from Trump's first term. Now that this drop has materialized, the president remains silent. However, his commerce secretary, Howard Lutnick, has hinted at a possible deal with Canada and Mexico. Could this be Trump's version of a put option?

S&P 500 Performance

This image is no longer relevant

According to Treasury Secretary Scott Bessent, the stock market is enduring short-term tariff pain for the sake of long-term prosperity. However, confidence in this vision is fading. A string of disappointing macroeconomic reports has led the Atlanta Fed's leading indicator to signal a US GDP contraction as early as the first quarter. Fears of a recession are sending investors fleeing like rats from a sinking ship, dragging the S&P 500 down.

It is, of course, too early to draw long-term conclusions based on just a few reports. However, the White House has pushed uncertainty to extreme levels, making business planning difficult and impacting the US economy. The situation is also aggravated by retaliatory measures from other countries and Elon Musk's initiative to downsize the federal government. If history repeats itself, just as in Trump's first term when the US faced an economic downturn toward the end, another recession may be on the horizon.

Economic Policy Uncertainty Trends

This image is no longer relevant

Will Donald Trump even bother to save the S&P 500? Judging by his social media activity, he seems to have lost interest in the stock market. During his first term, he mentioned it 156 times, 60 of which were in the first year alone. Since November, however, out of his 126 posts, only one referenced stock indices.

This image is no longer relevant

Without rolling back tariffs on Mexico and Canada, it is hard to expect the stock market to find a bottom, especially with potential new tariffs against the European Union coming in April.

From a technical perspective, the S&P 500 has already hit both short-position targets at 5,830 and 5,750 on the daily chart. A rebound from the latter resistance level increases the risk of consolidation. Given the current setup, a strategy of buying on dips and selling on rallies seems reasonable.

Marek Petkovich,
Analytical expert of InstaTrade
© 2007-2025

Recommended Stories

USD/JPY. Analysis and Forecast

The Japanese yen is attracting buyers following a recent decline, owing to its status as a safe-haven asset in times of uncertainty. The anticipated recovery of the yen is supported

Irina Yanina 18:47 2025-05-06 UTC+2

EUR/USD. Analysis and Forecast

The EUR/USD pair is struggling to establish a clear short-term direction, trading within a multi-day range as markets await decisive news from the upcoming FOMC meeting regarding the interest rate

Irina Yanina 11:05 2025-05-06 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair remains positive within a familiar range, without showing strong buying momentum. The strengthening of the U.S. dollar following a two-day decline is attributed to the positive

Irina Yanina 11:03 2025-05-06 UTC+2

The Market Took a Step Back

The longest winning streak of the S&P 500 in two decades has come to an end. But who's responsible? The Federal Reserve, which plans to keep rates unchanged

Marek Petkovich 10:16 2025-05-06 UTC+2

Markets Anxiously Await the Fed's Monetary Policy Meeting (Potential for Renewed Growth in Bitcoin and #NDX)

Markets remain tense. The U.S. Dollar Index and the cryptocurrency market are stagnating, caught between opposing forces. Investors are tensely awaiting the outcome of the Federal Reserve's monetary policy meeting

Pati Gani 10:02 2025-05-06 UTC+2

GBP/USD Overview – May 6: Trump Goes After the Film Industry

The GBP/USD currency pair traded upward during the first half of Monday and downward during the second half. While the U.S. dollar didn't lose much this time, its brief attempt

Paolo Greco 07:04 2025-05-06 UTC+2

EUR/USD Overview – May 6: The Protest Against Donald Trump Continues

The EUR/USD currency pair began a new upward cycle on Monday. At this point, no one is likely surprised by another drop in the U.S. dollar. The market started selling

Paolo Greco 07:04 2025-05-06 UTC+2

What to Pay Attention to on May 6? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Tuesday. In the Eurozone and Germany, the second estimate of April's services PMI will be published, but these are unlikely to attract

Paolo Greco 05:49 2025-05-06 UTC+2

Fed Rate Cut Probability Is Near Zero

This week marks the third Federal Reserve meeting of the year. At the first two meetings, monetary policy parameters remained unchanged, and there is virtually no chance of a rate

Chin Zhao 00:50 2025-05-06 UTC+2

The Dollar Sell-Off Shows No Signs of Slowing Down

The latest CFTC report reveals that the dollar sell-off continues unabated. Weekly changes against major currencies amounted to -$3.1 billion, bringing the total accumulated short position to -$17.1 billion

Kuvat Raharjo 00:50 2025-05-06 UTC+2
Can't speak right now?
Ask your question in the chat.
 

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 InstaTrade anyway.

We are sorry for any inconvenience caused by this message.