empty
17.06.2025 11:07 AM
Market may be falling into same trap again

History is repeating itself. Ahead of America's Independence Day, many market participants were saying that Donald Trump's bark was worse than his bite — suggesting the US president issued many threats but took little actual action. Reality proved otherwise: back then, the S&P 500 suffered a significant decline due to large-scale tariffs. Now, the index risks falling into the same trap again. Investors seem to believe that geopolitical risks are all bark and no bite.

Rumors of Iran's willingness to resume negotiations over its nuclear program were enough for retail investors to step in and buy the dip in the S&P 500. According to JP Morgan, retail investors purchased $23 billion worth of US equities in May alone. In early June, some players began taking profits, resulting in net sales of $400 million. However, any fresh attempts by the broad index to resume its uptrend are likely to attract new bulls.

The fading enthusiasm may also be due to the typical summer lull in the stock market. Derivatives suggest that the S&P 500 is likely to trade within a daily range of less than 1% for most of July. Key catalysts that could trigger more significant moves include upcoming US labor market reports and the Federal Reserve's policy meeting.

Projected fluctuations in S&P 500

This image is no longer relevant

In reality, Iran's interest in negotiations does not guarantee the end of the armed conflict. Tehran hopes to avoid direct US involvement on Israel's side. It knows that Jerusalem is not equipped for a prolonged campaign and is stalling for time. According to RBC Capital Markets, the S&P 500 could drop by as much as 20% if the Middle East conflict spreads to other countries and drags on. Such a scenario would be a clear negative for US stocks, hurting consumer sentiment, the broader US economy, and potentially prompting a hawkish shift from the Federal Reserve.

Indeed, Iran remains one of the world's largest oil producers. Bombings targeting oil infrastructure push Brent and WTI prices higher. Moreover, Tehran has the capability to block the Strait of Hormuz — a vital artery for Middle East oil exports to Europe. This could drive gasoline prices sharply higher in the US, making it difficult for the Fed to resume its easing cycle before year-end. Higher interest rates would clearly weigh on US equities.

Risks are also building on the trade front. The US has failed to nail down trade deals with Canada, Japan, and several other nations. As the 90-day grace period expires in early July, the likelihood of renewed trade wars grows.

This image is no longer relevant

Technical outlook for S&P 500

Technically, bulls on the S&P 500 are attempting to reclaim the key pivot level at 6,060 on the daily chart. As long as the broad index remains below this level — or if bullish attempts to break through it fail again — selling on rallies remains a valid strategy.

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

AUD/JPY. Analysis and Forecast

The AUD/JPY pair is regaining positive momentum after a modest pullback the previous day. However, spot prices remain confined within a multi-day range due to mixed fundamental signals, trading near

Irina Yanina 14:39 2025-06-20 UTC+2

USD/CHF: The Pair Struggles to Gain Momentum Amid Conflicting Forces

At present, USD/CHF shows no clear intraday direction and fluctuates within a narrow range just above the 0.8155 level, reflecting market uncertainty during the European session. The Swiss franc

Irina Yanina 14:36 2025-06-20 UTC+2

The Euro Will Retain Its Strength and Investor Interest

During her speech, IMF Managing Director Kristalina Georgieva stated that she sees the potential for the euro to play a broader role globally.Her remarks came amid growing geopolitical instability

Jakub Novak 11:25 2025-06-20 UTC+2

Euro Slightly Rises After Lagarde's Speech

The euro saw a modest recovery after European Central Bank President Christine Lagarde stated that expanding trade within the region could help offset losses resulting from global fragmentation. Her optimistic

Jakub Novak 11:10 2025-06-20 UTC+2

Donald Trump – A Mastermind of Geopolitical Uncertainty (A Potential Correction in Oil and Gold Prices)

Six months into Donald Trump's presidency, it seems he has already thoroughly exhausted the world with his "brilliant" initiatives, groundbreaking actions aimed at making America great again, and his vivid

Pati Gani 09:49 2025-06-20 UTC+2

The Market Tries to Extinguish the Fire

Markets are digesting Donald Trump's announcement that a decision on U.S. strikes against Iran will be made within two weeks. The White House could have acted at any moment

Marek Petkovich 09:01 2025-06-20 UTC+2

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 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.