S&P500 (SPX) Price Analysis – April 04, 2025
Daily Price Outlook
The S&P 500 (SPX) took a significant hit recently, dropping to 5,396 and reaching an intra-day low of 5,390. This sharp decline was largely driven by the rising tension between the US and China. US President Donald Trump announced new tariffs of at least 10% on all imported goods, which included a hefty 54% on Chinese products.
In response, China’s Commerce Ministry made it clear that they would take strong countermeasures to defend their interests. This exchange of tariffs has only added to the uncertainty, with worries growing about the future of the global economy.
Market Sentiment and Economic Outlook: Impact of Trade Tensions, Fed Expectations, and Labor Market Data
The global market sentiment has been flashing red, as evidenced by the bearish performance of the S&P 500 and other equity markets.
Trump’s new tariffs have raised concerns about a potential slowdown in global economic growth, with many investors now fearing a possible US recession. This uncertainty has spread across global markets, causing widespread losses.
The S&P 500 has been especially affected, as the trade tensions undermine investor confidence. There’s growing worry that a prolonged trade war could derail recovery efforts in key economies, making it a tough time for markets to stay positive.
On the US front, the broad-based US dollar (USD) has struggled to gain momentum, despite a slight bounce. Traders are increasingly expecting the Federal Reserve to cut interest rates again soon, especially with concerns about the economic slowdown fueled by Trump’s tariffs.
The potential for stagflation—a mix of rising inflation and slow economic growth—is adding to worries. This fear that the US economy could face such a scenario is putting more pressure on the broader equity markets, including the S&P 500, making investors cautious about the future.
According to the CME FedWatch tool, traders are now expecting the Federal Reserve to cut interest rates in its upcoming June meeting, as concerns about the US economy grow.
The likelihood of the Fed keeping rates steady has dropped sharply, from 81.5% last week to just 65.8%. This shift in expectations comes after President Trump’s tariff announcement, which has added more uncertainty and fueled market pessimism.
Economists are looking to the upcoming US Nonfarm Payrolls (NFP) report for insights into the health of the labor market.
However, the data likely won't change market expectations unless there is a big shift in hiring or inflation. The unemployment rate is expected to stay at 4.1%, but wage growth is predicted to slow, offering little help to the Fed’s decision-making process.
S&P 500 – Technical Analysis
The S&P 500 is extending its corrective decline, slipping 0.86% to trade near 5,396.51 following a rejection below 5,640 resistance and a firm breakdown beneath the 5,494 pivot.
The price action has carved out a clear descending channel, with the index now approaching key support at 5,341.70. A breach below this level would expose the next bearish target at 5,291, reinforcing a negative technical bias in the short term.
Adding to the cautious tone is the RSI, currently hovering at 29.56—deep in oversold territory, but not yet signaling a reversal. The index continues to trade well below the 50-period SMA at 5,675, a level that also aligns with the upper bound of the descending trendline. Any bounce from current levels is likely to face strong resistance at 5,494 and then 5,640.
The broader structure suggests the market remains vulnerable to further downside, particularly if macroeconomic risks persist or if investors react negatively to upcoming job or inflation data. A bearish setup remains valid as long as SPX stays below 5,492, with a downside target at 5,291 and a stop loss at 5,641.
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