As of March 18, 2025, the S&P 500 index has experienced significant volatility, influenced by President Donald Trump's recent tariff policies and anticipation surrounding the Federal Reserve's upcoming interest rate decision.
Scenario 1: Upside Potential Towards All-Time Highs
The S&P 500 has recently shown signs of recovery, with a 0.6% rise on Monday following a 2.1% surge on Friday, marking its best performance since Trump's re-election. This rebound suggests that, despite earlier corrections, investor sentiment may be improving.
If the Federal Reserve decides to maintain current interest rates in its upcoming meeting, it could signal confidence in the economy's resilience amid trade tensions. Such a stance might encourage further investment in equities, potentially propelling the S&P 500 towards its all-time highs. Additionally, some analysts believe that the market's recent correction is a healthy adjustment, and with improved earnings revisions and seasonal strength, a continued rally is plausible.
Scenario 2: Downside Risk Towards the 5,000 Support Level
Conversely, the aggressive tariff policies introduced by President Trump have raised concerns about inflationary pressures and potential slowdowns in economic growth. UBS analysts project that if the U.S. implements a 60% import tax on Chinese goods and a 10% tariff on other imports, the S&P 500 could end next year at 5,200, an 11% decline from its recent record close.
Furthermore, Goldman Sachs estimates that the current tariff plans could lead to a 5% drop in the S&P 500 in the coming months, as increased costs may squeeze corporate profit margins. If the Federal Reserve responds to these inflationary concerns by maintaining or even raising interest rates, borrowing costs could rise, potentially dampening consumer spending and business investment. Such developments might exert downward pressure on the S&P 500, bringing it closer to the 5,000 support level.
Summa Money
Our conclusion.
The S&P 500's trajectory in the near term is intricately linked to the outcomes of trade policies and monetary decisions. While the market has demonstrated resilience, the dual forces of tariff-induced economic adjustments and the Federal Reserve's interest rate stance will play pivotal roles in determining whether the index ascends towards new highs or retreats to key support levels.
In these volatile times, it is definitely a tough time to predict how the market would move , so this is why we are looking into the different options as how things would pan-out in the upcoming months in regards to the S&P500!
Positive outcome - Enter here with a target just below the ATH at 6,000 points, with your stop loss being above the bottom at 5,125 points
Negative outcome - Entere here with a target around the bottom at 5,000 , with a stop loss around the resistnace 5,750
I am interested to hear out your thoughs on this analysis and overall the idea behind whats happening with the U.S. economy and what would be the reaction for the S&P500!
Scenario 1: Upside Potential Towards All-Time Highs
The S&P 500 has recently shown signs of recovery, with a 0.6% rise on Monday following a 2.1% surge on Friday, marking its best performance since Trump's re-election. This rebound suggests that, despite earlier corrections, investor sentiment may be improving.
If the Federal Reserve decides to maintain current interest rates in its upcoming meeting, it could signal confidence in the economy's resilience amid trade tensions. Such a stance might encourage further investment in equities, potentially propelling the S&P 500 towards its all-time highs. Additionally, some analysts believe that the market's recent correction is a healthy adjustment, and with improved earnings revisions and seasonal strength, a continued rally is plausible.
Scenario 2: Downside Risk Towards the 5,000 Support Level
Conversely, the aggressive tariff policies introduced by President Trump have raised concerns about inflationary pressures and potential slowdowns in economic growth. UBS analysts project that if the U.S. implements a 60% import tax on Chinese goods and a 10% tariff on other imports, the S&P 500 could end next year at 5,200, an 11% decline from its recent record close.
Furthermore, Goldman Sachs estimates that the current tariff plans could lead to a 5% drop in the S&P 500 in the coming months, as increased costs may squeeze corporate profit margins. If the Federal Reserve responds to these inflationary concerns by maintaining or even raising interest rates, borrowing costs could rise, potentially dampening consumer spending and business investment. Such developments might exert downward pressure on the S&P 500, bringing it closer to the 5,000 support level.
Summa Money
Our conclusion.
The S&P 500's trajectory in the near term is intricately linked to the outcomes of trade policies and monetary decisions. While the market has demonstrated resilience, the dual forces of tariff-induced economic adjustments and the Federal Reserve's interest rate stance will play pivotal roles in determining whether the index ascends towards new highs or retreats to key support levels.
In these volatile times, it is definitely a tough time to predict how the market would move , so this is why we are looking into the different options as how things would pan-out in the upcoming months in regards to the S&P500!
Positive outcome - Enter here with a target just below the ATH at 6,000 points, with your stop loss being above the bottom at 5,125 points
Negative outcome - Entere here with a target around the bottom at 5,000 , with a stop loss around the resistnace 5,750
I am interested to hear out your thoughs on this analysis and overall the idea behind whats happening with the U.S. economy and what would be the reaction for the S&P500!
Trade closed: target reached
The trade is active and it ended up taking the down trend movement. Currently the huge tariffs emposed by President Donald Trump have pushed the S&P500 into the 4900 territory. We will revisit this trade and come back with an indication as to how it would move forward.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Join my Telegram community for Forex trading insights, real-time news, educational content and friendly support. Let's grow and succeed together! -
t.me/Capital55DG
t.me/Capital55DG
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.