S&P500 (SPX) Price Analysis – Jan 31, 2025
Daily Price Outlook
The S&P 500 (SPX) is currently trading around the 6,071 level, reaching an intra-day high of 6,086. Despite this upward movement, the index is facing resistance due to increasing economic uncertainty and trade tensions fueled by US President Donald Trump’s aggressive tariff policies.
Investors remain cautious as Trump reiterated plans to impose a 25% tariff on Canada and Mexico while confirming that China would also face new trade restrictions.
However, no specific timeline has been provided for these measures, leading to uncertainty in the financial markets.
Moreover, Trump has threatened 100% tariffs on BRICS nations if they attempt to introduce an alternative currency to challenge the US dollar in global trade.
These developments have heightened risk aversion, with investors weighing the potential impact on global economic stability and corporate earnings.
Mixed US Economic Data and Fed's Cautious Stance Weigh on S&P 500
However, the US economic outlook remains mixed, further complicating the S&P 500’s trend. On the data front, the latest report from the Department of Commerce showed that the US Gross Domestic Product (GDP) Annualized (Q4) declined to 2.3%, missing the expected 2.6% and falling from the previous quarter’s 3.1% growth.
This lower-than-expected GDP figure has added to concerns about a potential slowdown in economic activity.
At the same time, Initial Jobless Claims for the week ending January 24 came in at 207K, better than the forecast of 220K and improving from the previous week’s 223K. While this indicates some resilience in the labor market, it is not strong enough to offset broader concerns about economic growth.
Meanwhile, the US Dollar Index (DXY) remains higher, trading above 104.00, as the Federal Reserve’s hawkish stance continues to support the greenback.
The Fed recently decided to hold interest rates steady in the 5.25%-5.50% range, marking a pause after three consecutive rate hikes.
Fed Chair Jerome Powell emphasized the need for further progress on inflation or signs of labor market weakness before considering rate cuts.
This cautious approach from the central bank has contributed to uncertainty in equity markets, preventing the S&P 500 from gaining further momentum.
US Tariffs and Economic Data Impact on the S&P 500
On the flip side, the US President has announced plans to impose tariffs on imports of critical industries, including computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to shift production back to the United States.
Treasury Secretary Scott Bessent has proposed universal tariffs starting at 2.5%, which could rise to as much as 20%, reflecting Trump’s broader protectionist stance.
Looking ahead, market participants are closely watching key economic data, including the US Personal Consumption Expenditures (PCE) Price Index, due later on Friday.
This data will provide further insights into inflation trends and potential future actions by the Federal Reserve, which could influence the direction of the S&P 500 in the coming weeks.
S&P 500 – Technical Analysis
The S&P 500 continues its upward trajectory, currently trading at 6071.18 after gaining 0.53%. The index remains above the key pivot level at 6071.18, suggesting that bullish momentum is still intact.
Immediate resistance is seen at 6127.64, with further upside targets at 6171.70 and 6219.27. A break above these levels could extend the rally toward fresh highs as investor sentiment remains positive.
On the downside, immediate support lies at 6013.62, with additional key levels at 5969.55 and 5904.50. A drop below 6013.62 could trigger a corrective move, potentially testing lower support levels.
However, with the 50-day EMA positioned at 5971.80, buyers may step in on any pullback, keeping the broader trend intact.
Technically, the S&P 500 remains in a strong bullish trend, with higher highs and higher lows confirming positive momentum. As long as the index sustains above 6058, buyers are likely to remain in control, with a potential move toward 6127 in the near term.
Conversely, a failure to hold above 6013.62 could invite profit-taking and open the door for a pullback toward 5969.55.
Overall, the outlook remains bullish, with traders eyeing a breakout above 6127.64 for continued gains. However, monitoring volume and broader market sentiment will be key in confirming further upside.
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