empty
11.04.2025 08:42 AM
The Market Has Grown Used to Chaos

What is life if not a game? In past years, investors focused on the standoff between the Federal Reserve and financial markets. But in 2025, the rules of the game have changed. Now, it's the White House—not the central bank—that markets are testing for resilience. Donald Trump claimed winning a trade war would be easy, but the drop in the S&P 500 prior to the tariff delay announcement suggests that traders think otherwise. The Republican's step back on tariffs triggered a record surge in market capitalization. But the chaos is far from over.

The S&P 500's 9.5% rally in response to the U.S. freezing tariffs for 90 days clearly showed what markets consider the main threat to the global economy: the trade war. The next day, the White House clarified that tariffs on Chinese imports would stand at 145%—not the previously announced 125% by Trump on social media—the broad stock index fell by 3.5%.

S&P 500 Daily Performance

This image is no longer relevant

The sell-off that followed the historic rebound in the S&P 500 was the price investors had to pay for such extreme volatility.

The White House boasts that around 70 countries are willing to negotiate, and about 15 have already submitted proposals. However, a Wall Street Journal insider claims that most proposals are simply calls to lift tariffs. The U.S. administration is expected to demand increased purchases of American goods and reductions in foreign tariffs. But this is a lengthy process, historically taking years. The first trade war with China took months to begin negotiations. Now, Donald Trump aims to revise trade agreements even faster—potentially with nearly 100 countries.

As a result, skepticism is growing over the feasibility of Washington's plans. Combined with the unpredictability of its protectionist stance and the chaotic implementation of tariffs, this erodes trust in the U.S. economy and its financial assets. Rumors have begun circulating in the market that the U.S. may need a recession to reset its fundamentals.

U.S. Treasury Yield Dynamics

This image is no longer relevant

The trade war between the world's two largest economies will not end well for anyone. A 145% tariff is enormous, indicating that some portion of the $582 billion in Chinese imports into the U.S. will be redirected to other countries—if possible. Beijing has limited options to respond. One of them could be selling off U.S. Treasuries. Rising yields suggest that this process may already be underway.

This image is no longer relevant

Thus, the White House's tariff delay has not ended the market chaos. U.S. equity market volatility remains elevated.

From a technical standpoint, the S&P 500 daily chart forms an inside bar with a long lower shadow. A breakout above the 5355 high could signal short-term buying. However, opening short positions on a rebound from resistance levels at 5500 and 5600 remains valid.

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

What to Pay Attention to on July 3? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are scheduled for release on Thursday, including some key reports. As a reminder, U.S. labor market and unemployment data are typically released on Friday

Paolo Greco 06:53 2025-07-03 UTC+2

GBP/USD Overview – July 3: Jerome Powell Finally Responded to Trump

The GBP/USD currency pair plummeted on Wednesday like a stone. However, every drop in the pair eventually gives way to a much stronger rise. Therefore, at this point, there's

Paolo Greco 03:45 2025-07-03 UTC+2

EUR/USD Overview – July 3: One Big Trump Law Passed, Dollar at 4-Year Lows

The EUR/USD currency pair traded relatively calmly on Wednesday, although the word "calm" may not accurately describe the daily decline of the dollar. The most accurate picture of what's happening

Paolo Greco 03:45 2025-07-03 UTC+2

Transition from Aggressive to Cautious Position by the ECB

The annual economic forum is currently taking place in the Portuguese town of Sintra, which explains the daily speeches by central bank heads. Most of the information being shared

Chin Zhao 00:42 2025-07-03 UTC+2

USD/JPY. Yen: Interrupted Flight

The USD/JPY pair dropped by 200 points over two days and on Tuesday hit a nearly four-week low, testing the support level at 142.70 (the middle line of the Bollinger

Irina Manzenko 00:38 2025-07-03 UTC+2

The Dollar Has Found Its Achilles' Heel

Be careful what you wish for. Euro supporters believe that EUR/USD will reach at least 1.25 by 2026. However, one must understand that while the eurozone may remain a unified

Marek Petkovich 00:38 2025-07-03 UTC+2

USD/JPY. Analysis and Forecast

Recent political and economic statements are having a significant impact on the USD/JPY pair's dynamics. U.S. President Donald Trump expressed frustration over the prolonged trade talks with Japan

Irina Yanina 18:51 2025-07-02 UTC+2

Crowd sets tone, market follows

No fight. The S&P 500 managed to hit new record highs because market professionals — the so-called "smart money" — see no need to go against the prevailing momentum

Marek Petkovich 12:46 2025-07-02 UTC+2

AUD/USD. Analysis and Forecast

Today, the AUD/USD pair is retreating slightly from the new yearly high near 0.6590 reached yesterday and is trading within a narrow range. Nevertheless, the potential for further downside appears

Irina Yanina 12:44 2025-07-02 UTC+2

USD/CHF. Analysis and Forecast

The USD/CHF pair continues to trade within a narrow range above the 0.7900 level, remaining close to price levels last seen in 2011. The US dollar is showing some gains

Irina Yanina 11:58 2025-07-02 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.