empty
10.04.2025 10:58 AM
Wall Street responding to president's call

Where there's smoke, there's fire. At the start of the second week of April, a rumor spread on social media about a 90-day delay in US tariffs, causing markets to surge, only to return to their previous levels shortly after. The fake news was debunked, but it turned out that someone had access to sensitive information. Just two days later, Donald Trump himself announced the delay, and that earlier "rehearsal" became a moment of glory for the S&P 500 bulls.

The broad stock index jumped by 9.5%, marking its best percentage performance since the 2008 global financial crisis. Market capitalization surged by a record-breaking $5.1 trillion, with the biggest beneficiaries of the positive news from the White House being the tech stocks—yesterday's underdogs.

S&P 500's daily performance

This image is no longer relevant

Another record was set by the volatility index (VIX), which posted the sharpest downward move in its history. No surprise there—rarely does fear on the market so suddenly give way to greed, and the fear of missing out pushed the S&P 500 up like a rocket.

A clear example of this dramatic mood shift came from Goldman Sachs, which initially raised the probability of a US recession within the next 12 months to 65%, only to retract that forecast following the White House's 90-day tariff delay. The bank reverted to its base case: no recession.

Wags say the stock market has predicted nine out of the last five recessions. A steep drop in the S&P 500 is often a harbinger of economic contraction, as seen in 2008 and 2020. But there are cases, like during Russia's 1998 debt crisis, when the index tanked without a subsequent drop in GDP.

Share of equities in US household assets

This image is no longer relevant

Still, the connection between the S&P 500 and the real economy is undeniable. Currently, the share of equities in American household assets has reached a record-high 36%. Market growth sparks optimism and boosts consumer spending—and vice versa. Consumer activity directly affects GDP. That's why if the broad stock index doesn't recover, a cooling of US GDP will be almost inevitable.

This image is no longer relevant

In reality, the trade war is far from over. The 10% universal tariff remains in place, China is facing a 125% tariff burden, and there's no guarantee that talks with other countries will succeed. They may commit to terms they never intend to fulfill—just as China did in 2018–2019. Uncertainty hasn't gone away, and the S&P 500's rapid rise may yet prove to be a "fools' rally."

Technical outlook

On the daily chart, a large-bodied bar was formed. Long positions opened during the dip to support at 4,910 proved to be a smart move. However, a drop back below 5,405—or a rejection from resistance levels at 5,500 or 5,600—should be taken as signals to lock in profits and consider switching to short 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

What to Pay Attention to on June 2? A Breakdown of Fundamental Events for Beginners

Quite a few macroeconomic reports are scheduled for Monday, but only one truly important one. This concerns the U.S. ISM Manufacturing PMI. It's worth recalling that two business activity indices

Paolo Greco 06:07 2025-06-02 UTC+2

GBP/USD Overview – June 2: Another Surprise from Donald Trump

The GBP/USD currency pair experienced low volatility on Friday, but last week's events can already be overlooked — Trump never sleeps. Traders barely had time to recover from last Thursday's

Paolo Greco 03:55 2025-06-02 UTC+2

EUR/USD Overview – June 2: The American Circus Gains Momentum

The EUR/USD currency pair traded calmly on Friday, but this calm will not last long. Last week, particularly on Thursday, another storm erupted in the market, caused by a familiar

Paolo Greco 03:55 2025-06-02 UTC+2

EUR/USD. Hello June: ISM Indices, Eurozone Inflation, ECB Meeting, and May Nonfarms

The economic calendar for the upcoming week is packed with important events. The first week of every month is traditionally the most informative for EUR/USD traders, and June will

Irina Manzenko 01:48 2025-06-02 UTC+2

U.S. Dollar: Weekly Preview

The economic news background in the U.S. will be very strong. It's the beginning of a new month, so reports on business activity, the labor market, job openings, and unemployment

Chin Zhao 00:52 2025-06-02 UTC+2

British Pound: Weekly Preview

The British pound is currently experiencing what is arguably one of its best periods in the last 15 years. Of course, during such a long period, there have been moments

Chin Zhao 00:52 2025-06-02 UTC+2

Euro: Weekly Preview

The euro continues to experience no issues in its current trajectory. I would even say it hasn't had such a good period in quite a long time. Most importantly, this

Chin Zhao 00:52 2025-06-02 UTC+2

XAU/USD. Analysis and Forecast

Gold is declining below the $3300 level today. U.S. PCE data met expectations. A shift in trade flows is helping the U.S. dollar regain positive momentum. This is also undermining

Irina Yanina 17:37 2025-05-30 UTC+2

Inflation Is Almost Under Control

While the euro continues to hold its ground against the dollar, European Central Bank (ECB) Governing Council member Fabio Panetta indicated during an interview today that inflation in the eurozone

Jakub Novak 13:40 2025-05-30 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair is attempting to regain positive momentum today, though traders remain cautious ahead of the key U.S. Personal Consumption Expenditures (PCE) Price Index release. As a preferred inflation

Irina Yanina 13:22 2025-05-30 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.