S&P 500 is under pressure amid trade tensions and corporate earnings releases

The S&P 500 index (SPX) started the week with cautious gains. During Monday’s early trading, the price climbed slightly above the opening level and consolidated near 6,639.6. Last week, SPX was under significant pressure from an escalating trade conflict between the United States and China. After President Trump announced his plans to raise tariffs on Chinese goods, a massive sell-off in stocks triggered the index's largest daily drop in six months.

Investors began taking profits amid global trade tensions. Since the market had been in overbought territory for quite some time, Trump’s announcement acted as a catalyst for a long-awaited correction.

The approaching earnings season is now capturing market participants’ attention, as it could confirm or refute current expectations about corporate reports, particularly in the tech sector. Investors remain cautious ahead of releases from major banks and IT firms, boosting demand for safe-haven assets. At the same time, the Federal Reserve (Fed) is forecast to cut interest rates in December, which is tempering the most negative scenarios.

Technically, corrective pressure persists. Indicators confirm weaker bullish sentiment. The Chaikin Oscillator signals capital outflow, while the RSI (14) has dropped to 43, below the neutral level, indicating that upward momentum is fading. Another important signal of weakening momentum was the close on October 10th below the lower boundary of the ascending channel, which points to increasing selling pressure.

If corporate earnings exceed expectations, a retest of local highs is possible. Otherwise, a return to support levels at 6,500 and 6,450 is likely. Significant upside potential is limited by historically high multiples and fears of a global economic slowdown.

Consider the following trading strategy:

Sell the S&P 500 index at the current price, with Take profit set at 6,450 and Stop loss placed at 6,760.

The forecast remains valid from October 13 to October 20, 2025.