empty
30.04.2025 09:23 AM
The Market Hears What It Wants to Hear

How far will greed carry the crowd? The late April rally in the S&P 500 somewhat sweetened the bitter pill for Donald Trump. His first 100 days in office have marked the worst performance for the broad equity index since the 1970s. While hedge funds continue to rely on macroeconomic data and sell into strength, individual investors have adopted a strategy of tuning in to the voices of the U.S. administration.

Hedge Fund Positioning in U.S. Equities

This image is no longer relevant

Statements from White House officials about progress in trade talks and easing of auto tariffs outweighed disappointing data on consumer confidence, the trade balance, and job openings. The U.S. economy is cooling — the Atlanta Fed's leading indicator points to a 1.5% contraction in Q1, far worse than Bloomberg's +0.3% forecast.

Meanwhile, Commerce Secretary Howard Lutnick claims to have signed a deal with an unnamed country. According to National Economic Council Director Kevin Hassett, several agreements — particularly with Asian countries — are close. Treasury Secretary Scott Bessent mentioned progress in talks with South Korea, Japan, and India, stating that market clarity will return once Washington announces finalized trade deals.

Don't believe your eyes — believe your ears? The fiery speeches from White House officials were enough for the market to ignore the worst consumer confidence reading in five years, a record trade deficit, and a sharp drop in job vacancies. Hedge funds betting on economic slowdown may be fundamentally correct but have found themselves outmaneuvered by the crowd's confidence in buying the dips.

Interestingly, at the end of Trump's first 100 days, only one out of eleven S&P 500 sectors — consumer staples — showed gains. These are products Americans continue to buy even during a recession.

S&P 500 Sector Performance in Trump's First 100 Days

This image is no longer relevant

Greed allowed the market to forgive Donald Trump for another round of criticism toward Jerome Powell. The president referred to him as an employee who wasn't doing a very good job and claimed he knew more about interest rates than the Fed chair himself.

This image is no longer relevant

Whatever the White House's plan may be, it's working for now: words outweigh numbers. How long can this last? That may not matter — the key point is that now is the time to hedge against a potential S&P 500 downturn as the economy cools, especially since the cost of protection (i.e., options premiums) has recently declined.

Technically, on the daily chart of the broad market index, the bulls have successfully activated and completed a 1-2-3 reversal pattern. However, the odds of consolidation currently look stronger than the likelihood of a resumed uptrend. A rejection from resistance at 5625 or 5695, or a drop below 5500, would signal to lock in long profits and consider reversing positions.

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 Fed Is Right—It's Too Early to Cut Rates (I Expect a Decline in #SPX and an Increase in Gold Prices)

The fresh U.S. Consumer Price Index (CPI) data released on Wednesday, although below the consensus forecast, confirmed the persistence of inflationary pressure. This fully justifies the Federal Reserve's reluctance

Pati Gani 10:37 2025-06-12 UTC+2

Trump Threatens Tariffs Again – Markets React

President Donald Trump announced yesterday that he intends to send letters to trade partners within the next one to two weeks outlining unilateral tariff rates. This is ahead

Jakub Novak 09:10 2025-06-12 UTC+2

What to Pay Attention to on June 12? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Thursday, but only a few are truly important. The key reports to highlight are the GDP and industrial production data from

Paolo Greco 05:52 2025-06-12 UTC+2

GBP/USD Overview – June 12: Protests Against Trump and Fed Policy

The GBP/USD currency pair continued to trade very calmly on Wednesday. Naturally, when U.S. inflation data was released, we saw a brief burst of market reaction—though it didn't last long

Paolo Greco 04:07 2025-06-12 UTC+2

EUR/USD Overview – June 12: Is There Light at the End of the Tunnel?

The EUR/USD currency pair continued to trade very calmly throughout Wednesday. The market showed no reaction whatsoever to the seemingly positive news regarding U.S.-China trade negotiations. Why? Because that positivity

Paolo Greco 04:07 2025-06-12 UTC+2

Donald Trump Plans to Suppress the Uprising

For several consecutive days, protests and unrest have continued in some major U.S. cities, sparked by Donald Trump's new immigration policy. This time, the U.S. President has decided to deport

Chin Zhao 00:35 2025-06-12 UTC+2

EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S

Irina Manzenko 00:35 2025-06-12 UTC+2

Will the Dollar Maintain the Status Quo?

To make accurate predictions about the future, one must examine the past. The more than 10% rally in EUR/USD since the beginning of the year has been driven by four

Marek Petkovich 00:35 2025-06-12 UTC+2

XAU/USD. Analysis and Forecast

Currently, the price of gold remains confined within a weekly range. The key factors supporting price growth include a decision by the U.S. federal appellate court to uphold President Donald

Irina Yanina 18:35 2025-06-11 UTC+2

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen continues to trade within an intraday consolidation range, approaching the two-week low against the U.S. dollar reached yesterday. The main factors influencing the movement

Irina Yanina 18:33 2025-06-11 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.