empty
21.04.2025 11:46 AM
Markets in limbo: awaiting next shock or revival

After the rollercoaster ride of early April, the US stock market seems to have come to a standstill. The S&P 500 is neither alive nor dead — it's starting to resemble Schrodinger's cat. All it would take is one shock event for the broad equity index to tumble back into bear-market territory. And a social media post by Donald Trump could be that event. This is a man whose words move trillions. Corporate America has never seen anything like it. Should we really be surprised by a spike in volatility?

S&P 500 volatility trends

This image is no longer relevant

There is a reason the S&P 500 has plunged and is now stuck, awaiting further guidance from the man in the White House. The Republican firebrand has impressed investors with bold talk of shifting from short-term pain to long-term prosperity for the US. However, no one knows how far Trump is willing to go. Will this pain spiral into a recession? Or could negotiations between Washington and foreign capitals ultimately lead to a rollback of tariffs?

Some Wall Street firms are starting to issue binary forecasts for the S&P 500. Crossmark Global Investments, for instance, says the index could plunge to 4,000 in the event of a recession, or soar to 5,800 if the US manages to avoid one.

The trouble is that if Trump follows through with his pledge to eliminate the US current account deficit, American equities could take a serious hit. Historically, US trade imbalances have tended to shrink during economic downturns.

US foreign trade dynamics as percentage of GDP

This image is no longer relevant

This stems from the fundamental link between the current and capital accounts in the balance of payments. When the current account is negative, capital flows into the US to offset the imbalance. However, as the deficit narrows, capital flows out, weakening the USD index and making investments in American equities less attractive. After all, what is the point in buying US stocks if the dollar is about to lose 30%?

The White House's efforts to rebalance trade through the largest tariffs seen since the early 20th century — along with demands that other nations boost US imports — will inevitably reduce foreign income, making those countries less able to buy US-issued stocks and bonds. This is a structural shift with the potential to trigger a serious pullback in the S&P 500.

This image is no longer relevant

Instead of pursuing a backup strategy, Donald Trump is making matters worse by going after Jerome Powell. If the Fed's independence is truly undermined, confidence in the US dollar could sink to historic lows, accelerating capital flight from the country.

Technically, a 1-2-3 reversal pattern may be taking shape on the daily chart of the S&P 500 — but for that to happen, bulls need to reclaim the inside bar. A break above the 5,325 high would trigger a buy signal. Conversely, a clean break below the 5,250 low would reopen the path for short positions.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/CAD. Analysis and Forecast

The USD/CAD pair is showing a modest recovery from levels below 1.3600, retracing most of the previous day's losses, supported by a rebound in the U.S. dollar. In addition, concerns

Irina Yanina 13:09 2025-06-13 UTC+2

AUD/JPY. Analysis and Forecast

The AUD/JPY pair has been under selling pressure for the third consecutive day, reaching an almost two-week low around 92.30 during Friday's Asian session. After a sharp drop, spot prices

Irina Yanina 12:53 2025-06-13 UTC+2

Israeli Missile Strike on Iran Will Crash Global Markets (I Expect Bitcoin and #NDX to Resume Their Decline After a Local Upward Correction)

As I anticipated, the lack of a broad positive outcome in negotiations between China and the U.S. and renewed inflationary pressure led to a sharp decline in demand for corporate

Pati Gani 10:10 2025-06-13 UTC+2

Greed Will Do the Market No Good

The less you know, the better you sleep. Encouraged by a 21% rally in the S&P 500 from its April lows, the crowd continues to buy the dip—completely unbothered

Marek Petkovich 09:35 2025-06-13 UTC+2

What to Pay Attention to on June 13? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are scheduled for Friday, but we doubt that the data will significantly impact traders today—especially today. As a reminder, Donald Trump intends to raise tariffs

Paolo Greco 07:16 2025-06-13 UTC+2

GBP/USD Overview – June 13: The Court Won't Stop Donald Trump!

The GBP/USD currency pair continued its upward movement on Thursday and nearly updated its three-year high. For most of the day, quotes hovered around the 1.36 level

Paolo Greco 03:41 2025-06-13 UTC+2

EUR/USD Overview – June 13: America's Economy Gets Lucky

The EUR/USD currency pair continued its strong upward movement throughout Thursday. Is anyone still puzzled as to why the U.S. dollar keeps falling? From our point of view, the reasons

Paolo Greco 03:41 2025-06-13 UTC+2

Trump Sends Out "Letters of Happiness"

It has been less than two weeks since Donald Trump raised import tariffs on steel and aluminum for all countries except the UK. While negotiations with the UK were deemed

Chin Zhao 00:21 2025-06-13 UTC+2

GBP/USD. A Weak Pound Stronger Than a Weak Greenback

Following weak UK labor market data, equally soft figures on British economic growth were released on Thursday. Almost all components of the report came out in the "red zone," increasing

Irina Manzenko 00:20 2025-06-13 UTC+2

The Dollar Flees the Battlefield

The old becomes new again. The word "recession" again trended in the Forex and other financial markets. May's U.S. Consumer Price Index (CPI) fell short of Bloomberg analysts' forecasts. Following

Marek Petkovich 00:20 2025-06-13 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.