SPX feels weight of updated trade policy and official data release

The S&P 500 (SPX) Index opened at $6,236.8 today, August 4, cranking up pressure as markets digest the impact of President Trump’s recently enacted tariffs. The announcement of steep rate hikes ranging from 10% to 41% on imports from 69 countries, including Canada, India, and Taiwan, intensified selling pressure. In other words, these measures have only fueled fears of higher inflation and squeezed corporate earnings expectations amid softening global demand. The new duties are set to take effect on August 7, but they have already instigated the SPX drop, casting a shadow over the future of the world economy.

The disappointing US employment report released August 1, which showed only 73,000 new jobs in July compared to the Reuters forecast of 110,000, deepened market pessimism. This was particularly true after the downward revisions reduced the previous two months' figures by 258,000. The weakening in labor market confidence has fueled speculation about a potential September Fed rate cut, contrasting with the central bank’s decision to hold rates steady on July 30, which had underscored its cautious stance amid economic uncertainty.

What adds to the turmoil is the fact that President Trump abruptly dismissed the Bureau of Labor Statistics (BLS) chief on the same day as the weak data were published, thus raising questions about the reliability of official economic indicators. This decision has only served to exacerbate the anxieties of investors in a market where price fluctuations are contingent upon reliable info.

From a technical perspective, the market has been in retreat since July 31, when it peaked at an all-time high of $6,436.3—now acting as a key resistance level. The subsequent pullback was confirmed when the 20-period exponential moving average (EMA) crossed below the 50-period EMA on the H4 chart, suggesting weakening upward momentum. The RSI dropped to 22, entering oversold territory and hinting at a possible short-term correction. Although current technical indicators favor a further decline, a temporary recovery may precede continued downward movement.

Proposed trading strategy:

Sell at the current price with a Take Profit at $6,000 (the support level formed in June) and a Stop Loss above $6,350. If the Fed cuts rates in September, the price could rebound to $6,400. However, such a recovery will be short-lived if employment data isn't improved.

The forecast is valid from August 4 to August 11, 2025.