With negotiations scheduled to take place today, the stock market is cautiously betting that Donald Trump may soften his tone in his trade dispute with China. On Thursday, Trump and his Chinese counterpart, Xi Jinping, held a 90-minute phone conversation. Following the call, Trump said he was encouraged that the ongoing trade tensions could soon be resolved. These sentiments were reflected in a strengthening stock market, including the S&P 500 index.
The market was also buoyed by Friday's employment report, which came in slightly better than expected, easing concerns about the US economy's ability to cope with the early stages of Trump's tariff regime. Labor Department data showed that the economy added 139,000 jobs last month, which was down from the previous month but better than forecasted. Although job growth slowed in May, wage data exceeded projections.
According to the CME FedWatch tool, the probability of a Fed rate cut in July fell to 16% from 30%. Traders expect the next potential cut to occur in September. The Fed is in no hurry to lower borrowing costs, because the full impact of tariffs has yet to affect inflation figures, and the labor market is not deteriorating enough to force the Fed to intervene.
Technical analysis indicates that the S&P 500 index will likely aim to return to the 5,970 level as a medium-term support after leaving it untested in its upward movement.
The overall recommendation is to sell SPX.
Profit could be taken at 5,970. A stop loss could be set at 6,000.
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.
This content is for informational purposes only and is not intended to be investing advice.
