empty
25.02.2025 01:59 PM
US stock market escapes from narrow range

Markets follow a natural cycle: trends give way to consolidations, and consolidations lead to new trends.

Before the sell-off on February 23–24, the S&P 500 had gone 35 consecutive trading sessions without a 1% decline, marking its longest streak since December. This has happened only three times in 2024. Since the November presidential election, the broad stock index had been stuck in a tight 4% trading range—the narrowest since 2017. A breakout was inevitable, and bulls fled the battlefield.

S&P 500's performance

This image is no longer relevant

The market was falling ahead of NVIDIA's earnings report, despite expectations that the company's earnings would exceed forecasts. Strong economic data, corporate earnings which are twice higher than Wall Street estimates, and even a bullish shift from Morgan Stanley—all failed to support US stocks.

Even Morgan Stanley, which was previously bearish, now claims that the US stock market's underperformance compared to Europe and other regions won't last long. The S&P 500, they argue, remains the highest-quality index with the best profit potential.

According to Principal Asset Management, since 1965, 10%+ corrections in the S&P 500 have primarily been caused by either a hawkish Federal Reserve's policy shift, or prolonged high interest rates. Something similar is happening now, as derivatives markets don't expect rate cuts before June. However, the situation differs significantly—no one is even hinting at a hard landing.

S&P 500 and European stock index performance

This image is no longer relevant

The key drivers of the S&P 500 pullback include Donald Trump's confirmation that tariffs on Mexico and Canada will proceed as planned; the victory of Germany's Christian Democratic Union (CDU) in parliamentary elections; and investors' belief in an imminent resolution of the conflict in Ukraine. For a long time, the S&P 500 rallied as markets grew indifferent to Trump's tariff threats, which could slow the US economy.

However, the clock is ticking:

March 1: 25% tariffs on Mexico and Canada could take effect.

March 12: Steel and aluminum duties—to which the EU has promised retaliation.

April 1: Reciprocal tariffs with China are set to roll out.

Meanwhile, 10% duties on Chinese imports remain in place.

The CDU's victory under Friedrich Merz sent European stock indices, led by the DAX 40, soaring. This accelerated capital outflows from the US to Europe, reinforcing the narrative of waning US market dominance and diminished faith in American tech giants.

This image is no longer relevant

Technical outlook for S&P 500

On the daily chart, the S&P 500 continues to form an expanding wedge reversal pattern. For confirmation, the index needs to break below 5,925. Once this occurs, a short-term rebound is expected, providing an opportunity to increase short positions from 6,083.

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 Pound Attempts to Hold Within the Bullish Channel

The United Kingdom is among the few G20 countries that got off relatively lightly—it was hit with a 25% tariff on car exports and a 10% tariff on other goods

Kuvat Raharjo 00:58 2025-04-08 UTC+2

The Euro Adopts a Coyote Tactic

If someone strikes your left cheek, there's no need to plead for mercy. Interestingly, more than 50 countries, according to the White House, have done just that. But not China

Marek Petkovich 00:56 2025-04-08 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is regaining ground after Friday's decline, trading just below the psychological level of 1.1000 amid mixed signals. The U.S. dollar is struggling to capitalize

Irina Yanina 18:55 2025-04-07 UTC+2

XAU/USD. Analysis and Forecast

At the moment, gold has halted its corrective decline from the all-time high reached last week. The recent plunge in global financial markets, triggered by the mutual tariffs initiated

Irina Yanina 18:52 2025-04-07 UTC+2

Jerome Powell Is Not Ready to Intervene

Investors were deeply disappointed when Federal Reserve Chair Jerome Powell made it clear during his Friday speech at the end of last week that he does not intend to intervene

Jakub Novak 11:11 2025-04-07 UTC+2

Markets Descend Further into Chaos (Expect Renewed Declines in #SPX and #NDX)

The global market crash continues. The trade war declared by Donald Trump on much of the world is in full swing. Investors have stopped reacting to economic data, even though

Pati Gani 10:08 2025-04-07 UTC+2

The Market Left Empty-Handed

The market appeared to have bottomed out; however, someone knocked from below. A two-day selloff triggered by Donald Trump's sweeping tariffs turned out to be the fourth-worst in the history

Marek Petkovich 09:44 2025-04-07 UTC+2

What to Pay Attention to on April 7? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Monday. After last week's developments, we believe these events will have no impact on the movements of either currency pair. Nonetheless, today's

Paolo Greco 07:03 2025-04-07 UTC+2

EUR/USD Weekly Preview: U.S. Inflation Reports and the Fate of the "Big Tariffs"

The upcoming week promises to be just as volatile as the previous one. The so-called "big tariffs," which are set to take effect on April 9, are at the center

Irina Manzenko 06:13 2025-04-07 UTC+2

GBP/USD Pair Overview – April 7. The British Pound Delivered a Major Surprise on Friday

The GBP/USD currency pair rose 280 pips between Wednesday and Thursday, only to crash by 340 on Friday. These kinds of "flights" have become a regular occurrence lately. While

Paolo Greco 03:23 2025-04-07 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.