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 Fed Allows Only One Rate Cut in 2025

The Federal Reserve continues to remain silent this year. While the European Central Bank has already cut interest rates three times and the Bank of England twice, the FOMC

Chin Zhao 00:40 2025-05-20 UTC+2

AUD/USD. RBA May Meeting: Preview

The Reserve Bank of Australia (RBA) will conclude its meeting on Tuesday, May 20, which may result in a softening of monetary policy parameters. The "dovish" scenario is the most

Irina Manzenko 00:40 2025-05-20 UTC+2

The Dollar Has Sold America Out Completely

Overall, the strength of the EUR/USD uptrend remains intact. The erosion of confidence in the U.S. dollar outweighs the divergence in monetary policy between the Fed and the ECB. Technical

Marek Petkovich 00:40 2025-05-20 UTC+2

AUD/USD. Analysis and Forecast

Spot prices for the AUD/USD pair remain within the familiar range held over the past month, as traders await a fresh catalyst before committing to the next directional move

Irina Yanina 18:22 2025-05-19 UTC+2

WTI – West Texas Intermediate. WTI Crude Holds Modest Intraday Losses

Today, West Texas Intermediate (WTI) crude oil is holding modest intraday losses. Uncertainty surrounding the ongoing US-Iran nuclear talks, along with rising tensions between Estonia and Russia following Sunday's detention

Irina Yanina 18:16 2025-05-19 UTC+2

USD/CAD. Analysis and Forecast

On Monday, the first trading day of the week, the USD/CAD pair attempted to gain significant upward momentum during the Asian session, but the European session failed to support this

Irina Yanina 18:03 2025-05-19 UTC+2

Bitcoin falls prey to crooks

Trust in the financial world is not exclusive to the US dollar. News that scammers have stolen data from approximately 197,000 clients of Coinbase — the world's largest crypto exchange

Marek Petkovich 13:20 2025-05-19 UTC+2

Are There Reasons for the Market Rally to Continue? (Possible Decline in AUD/USD and Growth in GBP/USD)

The coming week is expected to be light on major events or dramatic headlines—no new promises from Donald Trump to shake the world. Nevertheless, there will still be factors worth

Pati Gani 09:52 2025-05-19 UTC+2

The Market Has Gone Too Far

Nothing seems to matter. One would think that after the White House signed trade agreements with Britain and China, and following Donald Trump's visit to the Middle East, the S&P

Marek Petkovich 09:18 2025-05-19 UTC+2

What to Pay Attention to on May 19? A Breakdown of Fundamental Events for Beginners

On Monday, there are very few macroeconomic events scheduled. The only noteworthy release will be the second estimate of the Consumer Price Index (CPI) for April in the Eurozone, which

Paolo Greco 07:34 2025-05-19 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.