empty
01.04.2025 09:13 AM
US stock market: bad news fully priced in

The S&P 500 had its worst quarter in three years. Investors are shifting capital from North America to Europe. Once-booming US tech stocks have collapsed. Major banks and respected institutions are raising the odds of a recession for the American economy. That's a lot of bad news for a broad stock index, isn't it? However, buying the dip towards the lower boundary of the sideways range at 5,500–5,790 has borne fruit — just in time for America's "Liberation Day".

Performance of US stock indices

This image is no longer relevant

Donald Trump's policies have caused turmoil not only in financial markets but also among the general public. According to the latest Associated Press poll, nearly 60% of Americans disapprove of the president's protectionist stance, and 58% are dissatisfied with his overall handling of the US economy. The market sell-off reflects investor skepticism, but the Republican leader remains undeterred. He insists the country must endure short-term pain to reclaim a golden era for America.

That "Liberation Day" will come on April 2, when the White House is set to announce new tariffs. According to Wall Street Journal sources, the president is weighing two options: blanket 20% import tariffs or tailored, reciprocal tariffs. The former could send another shock through financial markets, while the latter might calm nerves.

Following JP Morgan and Moody's Analytics, Goldman Sachs has raised the probability of a US recession from 20% to 35%. Yet investors have found new reasons for optimism. After a massive sell-off in tech stocks, forward P/E ratios are now approaching historical averages. In other words, stocks are no longer overvalued, making them more attractive.

US tech sector P/E trends

This image is no longer relevant

The White House's new tariffs could also slow capital outflows from North America to Europe. A full-blown trade war would likely hit the EU harder due to its large trade surplus with the United States. Moreover, part of the capital shift was driven by a 4.6% gain in the euro against the dollar in the first quarter. As a result, European investors lost about 13% on US-listed assets.

This image is no longer relevant

According to Wells Fargo, the dollar's January-March slide was temporary. Looking ahead, tariffs and trade tensions could boost the greenback by 1.5% to 11%, with maximum gains expected if America's trade partners avoid a full-scale retaliatory response.

From a technical standpoint, the S&P 500 has bounced off the lower boundary of the previously established 5,500-5,790 consolidation range. Long positions opened at the 5,500 level appear to be worth holding. A break above the resistance levels at 5,625 (pivot) and 5,670 (fair value) would allow for additional long 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

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.
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.