The positive influence on the stock market from the reduced trade tension risks, has already been priced into current valuations, including the S&P 500 index. Currently, there are no more reasons for both for massive selling and further price increase can be found. Apparently, the index has reached its maximum for recent months and may start a sideways trend.
Economists and top Federal Reserve officials are seeing a growing risk of a weakening US job market due to the trade market unpredictability, according to the minutes of the central bank's latest policy decision released on Wednesday.
According to the protocol, the labor market is expected to weak intensively. Moreover, Fed economists renewed their forecasts on the level of inflation this year and lowered their expectations for economic growth during the meeting on May 6–7. The policymakers were also concerned about whether the job market's stability could be maintained, especially if Trump continues his erratic tariff regime with repeated on-and-off actions.
Fed officials assessed the near-term labor market weakening as a risk, with prospects remaining highly uncertain. Outcomes would depend heavily on developments in trade policy and other factors.
The results of surveys show a distrust of US citizens regarding the presence of an effective plan for tariffs by President Trump. Federal Reserve officials reported business contacts and survey respondents citing hiring freezes or cutbacks due to heightened uncertainty.
A strong labor market remains crucial, as consumer spending—making up roughly 70% of US GDP—depends on households' ability to sustain economic activity. Rising layoffs could force spending cuts, potentially triggering a downward spiral of slower growth and further job losses.
Inflation trends also play a pivotal role in shaping financial markets. With today’s release of the US Personal Consumption Expenditures (PCE) price index, higher-than-expected figures could reinforce the Fed’s stance against monetary easing. This scenario would likely support the dollar while weighing on equities, including the S&P 500.
The overall recommendation is to sell SPX if the PCE price index exceeds forecasts.
The profit should be taken at the level of 5,750. A Stop loss could be set at the level of 6,000.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
