S&P500 (SPX) Price Analysis – May 02, 2025
Daily Price Outlook
During the early US trading session, the S&P 500 index (SPX) extended its gains and climbed to 5,604.14, up 35.08 points.
The rally was largely supported by renewed optimism over easing US-China trade tensions and growing hopes for a Federal Reserve interest rate cut in June. These factors bolstered investor sentiment and helped drive the index to fresh highs.
S&P 500 Strength Boosted by Easing Trade War Fears and Diplomatic Signals
The S&P 500’s upward momentum was fueled by encouraging developments in US-China trade relations. Comments from China’s Commerce Ministry indicated a willingness to resume talks with Washington, stating that “the door is open” for negotiations.
In return, US President Donald Trump expressed optimism about reaching a trade agreement, emphasizing that a deal would be on favorable terms for the US.
This sentiment was reinforced by Washington’s hints at potential trade deals with other key partners including South Korea, Japan, and India.
Traders reacted positively to these signs of diplomatic progress, reducing fears of further tariff escalation and supporting risk appetite in equity markets.
Fed Rate Cut Bets Add to Bullish Outlook for Equities
Apart from trade developments, hopes for monetary policy easing also underpinned the S&P 500’s rally. The CME FedWatch Tool shows markets are now pricing in a 58.6% chance of a rate cut at the June Federal Reserve meeting. This shift comes as several recent US economic indicators point toward a slowdown.
Notably, initial jobless claims climbed to 241,000 last week—the highest level since February—and the ISM Manufacturing PMI stayed in contraction for a second straight month, slipping to 48.7 in April.
Meanwhile, the ADP employment report and upcoming Nonfarm Payrolls (NFP) data suggest a cooling labor market, with April job gains projected at just 130K compared to 228K in March.
Average Hourly Earnings are expected to rise 0.3% monthly and 3.9% year-over-year, offering insight into inflationary pressures.
Investor Caution Ahead of Key Economic Data and Inflation Trends
Despite the positive equity momentum, investors remain cautious ahead of the NFP report and upcoming inflation figures.
The US Dollar, which recently rose to a three-week high amid global trade optimism, is facing some pressure as traders brace for signs of slowing growth.
The possibility of four quarter-point Fed rate cuts by year-end has also gained traction following disappointing GDP and PCE inflation data.
These combined factors—moderating inflation, trade de-escalation, and softening labor indicators—are feeding expectations that the Fed may pivot toward a more dovish stance to support economic stability.
Until then, the S&P 500 is likely to remain sensitive to both trade developments and economic releases, as markets continue to navigate a complex global landscape.
S&P 500 – Technical Analysis
The SPX is showing continued strength after breaking above key levels earlier this week. Recent action indicates that the index is firmly testing resistance around 5604 as it climbs from lower levels in April.
Price recently closed above the 50-SMA, which now serves as dynamic support. Although the latest candle featured a slight rejection at the upper band, it appears more like a brief pause rather than a sign of reversal.
Structurally, the index is forming a rising wedge with a series of higher lows that confirm the bullish trend. The RSI currently reads 61.33, indicating healthy momentum without yet reaching overbought levels.
Candlestick patterns, including a small spinning top, have emerged, suggesting some caution among traders—but no major bearish formations like three black crows have materialized.
The absence of significant divergence between price and RSI further supports the view that upward pressure could persist if bulls maintain their grip.
Technically, the market is looking for a break above the recent resistance at 5604. Should bulls succeed, the next target could be set at 5781, with further gains possible if momentum builds.
Conversely, if price falls back and breaches support at 5426, the index may retest lower levels around the 50-SMA as a fallback.
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