empty
06.05.2025 10:16 AM
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 at its May 6–7 meeting? Or Donald Trump, who has revived tariff threats? The President announced 100% import duties on films produced outside the United States. Investors had seriously expected that the peak of trade policy uncertainty in Washington was behind them, and that duties would only be reduced going forward. Not so fast!

S&P 500 Daily Performance

This image is no longer relevant

Wells Fargo Securities is banking on that very peak of uncertainty being behind us. The firm is firmly sticking to its forecast for the S&P 500 to reach 7007 by the end of 2025 and remains Wall Street's most bullish forecaster. Fundstrat follows with a target of 6600, and Scotiabank with 6650. The consensus estimate from 29 strategists projects the broad equity index to rise to 5853.

Neither the positive ISM non-manufacturing activity data nor the fiery speeches from White House officials helped the S&P 500. Commerce Secretary Howard Lutnick expressed optimism about the economy and believes Donald Trump will reshape the world. Treasury Secretary Scott Bessent announced trade deals with 17 out of 18 major trading partners and claimed the U.S. remains the primary destination for global capital. The "sell America" strategy isn't worth a dime.

S&P 500 vs. Consensus Forecast for the Broad Index

This image is no longer relevant

The faster-than-expected growth in service sector activity is actually being driven by a stagflation scenario. Price components in the PMI rose even faster. If that continues, the Fed's pause in its monetary easing cycle could drag on. Futures markets are confident the federal funds rate will remain unchanged in May and now give only a 27% chance of a rate cut in June — down from 65% just a week ago.

Investors are starting to realize that if the Fed does ease policy, it will only happen against the backdrop of a cooling economy and rising recession risks — a scenario extremely unfavorable for equities.

This image is no longer relevant

There is a strong likelihood that by keeping rates steady, the Fed will again face criticism from Donald Trump, whose threats to fire Jerome Powell recently dealt a blow to the S&P 500. The President was even forced to declare, in light of the market crash, that he never intended to remove Powell. Still, the Republican's unpredictability raises the risk of renewed waves of criticism.

Technical Outlook

On the daily chart, a rejection from the pivot resistance level at 5695 has created conditions for short positions. Although these bearish positions currently look unstable, a drop below 5630 on the broad index would boost sellers' confidence and provide grounds for adding to shorts. It would make sense to return to long positions if the index climbs back above 5695.

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 Market Has Moved On From the War

Does Iran want war? Judging by the symbolic attack on American bases in Qatar, Tehran does not appear eager to enter into an armed conflict with Washington — which

Marek Petkovich 07:19 2025-06-24 UTC+2

What to Pay Attention to on June 24? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Tuesday, and none are of significant importance. Essentially, the only one worth mentioning is the German Business Climate Index —

Paolo Greco 07:19 2025-06-24 UTC+2

GBP/USD Overview – June 24: No Confirmation of Destruction

The GBP/USD currency pair also traded relatively calmly on Monday. While there were some price "swings," many traders and analysts had expected a much more significant move. The dollar strengthened

Paolo Greco 03:45 2025-06-24 UTC+2

EUR/USD Overview – June 24: Iran Exits Talks and Launches a Retaliatory Strike

The EUR/USD currency pair traded extremely calmly on Monday, considering the intense fundamental backdrop that developed over the weekend. Recall that over the weekend, Donald Trump once again "changed

Paolo Greco 03:45 2025-06-24 UTC+2

Trump Keeps Hitting a Wall

There's a saying: "An irresistible force meets an immovable object." It describes an irreconcilable standoff where neither side is willing to compromise. In my view, Trump's "scythe," with which

Chin Zhao 00:12 2025-06-24 UTC+2

Should We Expect De-escalation in the Middle East?

The market has absorbed the news of U.S. strikes on Iran's nuclear facilities quite resiliently. Why did this happen, and why was the reaction relatively muted? These questions are unlikely

Chin Zhao 00:12 2025-06-24 UTC+2

What Will Powell Say?

Starting June 24, Fed Chair Jerome Powell will address Congress over two days, delivering the semiannual monetary policy report. On Tuesday, he will speak before the Senate Banking Committee

Irina Manzenko 00:12 2025-06-24 UTC+2

The Euro Gets a Knife in the Back

Trouble never comes alone. European industry is beginning to lose steam after rapid growth driven by a front-loaded surge in U.S. imports. The euro area is a net oil importer

Marek Petkovich 00:11 2025-06-24 UTC+2

XAU/USD. Analysis and Forecast

Today, gold is attracting new sellers. Amid a sharp escalation in the conflict between Iran and Israel, the United States conducted airstrikes on three Iranian nuclear facilities in Fordow, Natanz

Irina Yanina 17:59 2025-06-23 UTC+2

USD/JPY. Analysis and Forecast. The Japanese Yen Maintains an Intraday Bearish Outlook

Today, Monday, selling pressure on the Japanese yen dominates, driven by several factors. Traders continue to push back expectations of a potential rate hike by the Bank of Japan, assuming

Irina Yanina 17:56 2025-06-23 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.