empty
01.05.2025 12:01 PM
Market pins blame on former president

In April, the US stock market took investors on its wildest roller coaster ride since the pandemic. The White House's "American Liberation Day" tariffs seemed to undermine the S&P 500's stability, pushing it into bear market territory. Yet, the longest 7-day rally since November helped the broad index recover nearly all of its losses by month's end.

A defining trait of today's market is its herd-like behavior. Correlation between individual stocks within the S&P 500 surged, with investors reacting to the same headlines—primarily from the White House—rather than to macroeconomic data. The latest confirmation came when the S&P 500 rallied in response to disappointing private-sector job numbers from ADP and weak GDP data.

S&P 500 Stock Correlation Trend

This image is no longer relevant

For the first time since 2022, the US economy contracted, shrinking by 0.3% in the first quarter. The downturn was driven by a 41% surge in imports amid tariff fears, which resulted in net exports shaving a record 4.8% of GDP. After an initial slump following the grim data, the S&P 500 rebounded and closed the session in the green.

Investors seem to believe that the negative impact from import activity is temporary. As inventory levels normalize, the reading will decline. The White House also stepped in to calm nerves. Council of Economic Advisers Chair Steven Miran has asserted that the US economy is stronger than the data suggests, noting that companies anticipating a recession typically hold back on investments.

Key drivers of US GDP performance

This image is no longer relevant

Donald Trump blamed Joe Biden for the economy's weakness, claiming that the Democrat handed it over in dire shape but tariffs and reshoring, he argued, would eventually turn things around.

Once again, investors bought the dip, encouraged by renewed confidence in Trump's so-called "put." Commerzbank believes that the worse US macroeconomic indicators get, the higher the likelihood that the White House will soften its stance and roll back a significant portion of the tariffs. In an environment of extreme bearish speculative positioning and lingering retail investor pessimism, hopes for a Republican backstop are helping lift the S&P 500.

This image is no longer relevant

In my view, Trump still cares deeply about the stock market. He does not want to see the S&P 500 fall too deep and appears to be trying to halt the slide with supportive rhetoric. Still, sooner or later, investors will refocus on the data, which, unfortunately, remains far from encouraging.

Technical Outlook:

On the daily chart, the S&P 500 continues to form a 1-2-3 reversal pattern. A breakout above the moving averages confirms bullish progress. However, for the rally to continue, bulls should clear resistance at 5,625 and 5,695. A successful breakout would allow for expanding long positions initiated from the 5,400 level or for bears to flip their stance.

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

GBP/USD Overview – June 12: Protests Against Trump and Fed Policy

The GBP/USD currency pair continued to trade very calmly on Wednesday. Naturally, when U.S. inflation data was released, we saw a brief burst of market reaction—though it didn't last long

Paolo Greco 04:07 2025-06-12 UTC+2

EUR/USD Overview – June 12: Is There Light at the End of the Tunnel?

The EUR/USD currency pair continued to trade very calmly throughout Wednesday. The market showed no reaction whatsoever to the seemingly positive news regarding U.S.-China trade negotiations. Why? Because that positivity

Paolo Greco 04:07 2025-06-12 UTC+2

Donald Trump Plans to Suppress the Uprising

For several consecutive days, protests and unrest have continued in some major U.S. cities, sparked by Donald Trump's new immigration policy. This time, the U.S. President has decided to deport

Chin Zhao 00:35 2025-06-12 UTC+2

EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S

Irina Manzenko 00:35 2025-06-12 UTC+2

Will the Dollar Maintain the Status Quo?

To make accurate predictions about the future, one must examine the past. The more than 10% rally in EUR/USD since the beginning of the year has been driven by four

Marek Petkovich 00:35 2025-06-12 UTC+2

XAU/USD. Analysis and Forecast

Currently, the price of gold remains confined within a weekly range. The key factors supporting price growth include a decision by the U.S. federal appellate court to uphold President Donald

Irina Yanina 18:35 2025-06-11 UTC+2

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen continues to trade within an intraday consolidation range, approaching the two-week low against the U.S. dollar reached yesterday. The main factors influencing the movement

Irina Yanina 18:33 2025-06-11 UTC+2

EUR/GBP. Analysis and Forecast

However, at this point, it lacks follow-through buying, despite a fundamental backdrop that suggests the path of least resistance for spot prices lies to the upside. The weak performance

Irina Yanina 11:38 2025-06-11 UTC+2

Results of the Second Round of U.S.–China Negotiations

The United States and China have concluded two days of important trade negotiations with a plan to resume the flow of sensitive goods — this framework now awaits approval from

Jakub Novak 11:32 2025-06-11 UTC+2

The U.S. and China: A Small Step Forward. What's Next? (Potential for a reversal and decline in EUR/USD and NZD/USD pairs)

Representatives from the United States and China have reached a framework agreement on trade following two days of high-level talks in London. But why isn't there a sense of euphoria

Pati Gani 09:52 2025-06-11 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.