S&P 500 Nears 6,100: Can Bulls Overcome Tariffs and Economic Uncertainty?
The S&P 500 (SPX) is trading around 6,071, reaching an intra-day high of 6,086.
However, despite its recent upward momentum, the index is facing resistance due to rising economic uncertainty and escalating trade tensions. Market participants are closely monitoring the impact of US President Donald Trump’s tariff policies, which could weigh on global trade and corporate earnings.
Trump reaffirmed plans to impose a 25% tariff on Canada and Mexico, along with new trade restrictions on China, though no specific timeline has been provided. Additionally, he has threatened 100% tariffs on BRICS nations if they attempt to introduce an alternative currency to challenge the US dollar’s dominance in global trade. These uncertainties have heightened risk aversion, limiting further upside for US equities.
US Economic Data Sends Mixed Signals
The broader economic outlook remains uncertain, with recent data reflecting slowing growth but resilient labor markets:
- US Q4 GDP Growth: Fell to 2.3%, missing expectations of 2.6%, down from 3.1% in Q3, raising concerns about a potential slowdown.
- Initial Jobless Claims: Improved to 207K, beating forecasts of 220K and improving from the previous week’s 223K, showing resilience in the labor market.
- US Dollar Strength: The US Dollar Index (DXY) remains elevated above 104.00, supported by the Federal Reserve’s hawkish stance on interest rates.
The Federal Reserve recently held rates steady at 5.25%-5.50%, signaling a pause after three consecutive hikes. Fed Chair Jerome Powell emphasized that further progress on inflation or signs of labor market weakness would be needed before considering rate cuts, adding another layer of uncertainty to equity markets.
Technical Analysis: Can the S&P 500 Break Higher?
The S&P 500 is currently in an upward trend, trading at 6,071 with immediate resistance at 6,086. A break above this level could open the door to further gains, with key upside targets at:
- 6,100 – Psychological Resistance
- 6,127 – Previous High
- 6,182 – Next Bullish Target
On the downside, immediate support is seen at 6,013, followed by:
- 5,998 – 50-Day EMA Support
- 5,934 – Key Pivot Zone
- 5,873 – Stronger Support Level
The broader trend remains bullish, with higher highs and higher lows confirming positive momentum. However, failure to hold above 6,013 could trigger profit-taking, pushing the index toward 5,998 or lower.
Conclusion: Watching Key Data for Market Direction
As the S&P 500 approaches key resistance levels, investors remain focused on Federal Reserve policy, upcoming economic data, and geopolitical risks. Key reports, including the US Personal Consumption Expenditures (PCE) Price Index, will provide further insights into inflation trends and potential Fed policy shifts.
While bullish momentum remains intact, the risk of trade policy disruptions and economic slowdown concerns could weigh on market sentiment. Traders should monitor volume, breakout confirmations, and broader macroeconomic trends to navigate potential volatility in the coming weeks.
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