Optimism on first steps of Trump's protectionist rollback drives SPX buying

Economists estimate that the trade war unleashed by Trump could shave 2.8% off U.S. GDP growth this year. Broad import restrictions have already been assessed by the stock markets, which have been in the red zone for the second week, including the broad market index S&P 500.

Many experts have talked about the return of the threat of the U.S. falling into recession. Trade tensions caused by Trump's policies are already taking a toll on the United States. New data on Wednesday showed a slowdown in wage growth, and a separate report from the Federal Reserve noted a significant drop in U.S. business confidence.

Amid the gloomy economic outlook, Donald Trump is still showing some signs of rationality when it comes to the threats to the country that his own initiatives have created.

Yesterday, Trump reversed his own decision and exempted automakers from his punitive 25% tariffs against Canada and Mexico for one month, provided they comply with existing free trade rules. This move, at least for now, halted Wall Street's steepest decline in three months.

The White House said Trump is also open to discussing other goods that should be exempt from the tariffs, which went into effect early Tuesday.

Canada is ready to scale back its retaliation to U.S. tariffs if the Trump administration lifts some of the duties it imposed, a Canadian government source said.

Trump's tariffs pose huge challenges, especially for American automakers that produce cars in three countries on the continent, and often ship parts across North American borders multiple times as they are assembled into systems and finished vehicles.

Trump may also eliminate a 10% tariff on imports of Canadian energy products such as crude oil and gasoline, according to a source familiar with the discussions.

All of this suggests that most of the punitive measures initiated by Trump will eventually be rolled back, and U.S. economic growth will get back on track. This is creating optimism among investors and supporting the stock market as a whole, not just individual sectors.

The overall recommendation is to buy S&P 500 stocks.

Profit could be taken at 6020.00. A stop loss could be set at 5700.0.

The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 1% of your deposit.