empty
17.04.2025 09:55 AM
Markets swing between euphoria and panic

If you believe a recession is looming, the rule is simple: sell first, ask questions later. When the National Bureau of Economic Research officially declared a recession in the United States in December 2008, the S&P 500 plunged, marking a historic moment. Now, the era of calm in US equities is firmly in the rearview mirror, giving way to constant turbulence. Investors need to adjust to a new reality.

In 2024, the S&P 500 hit dozens of record highs and avoided single-day declines of 2% or more, making it the best year for bulls since 2007. What came next is etched in the market's memory. Today, the odds of a US recession are rising rapidly.

US recession probability

This image is no longer relevant

The calm of recent years has been shattered by Donald Trump's trade policies. According to Fed Chairman Jerome Powell, markets are simply doing what they are supposed to do: reacting to the biggest tariff hike since the 1930s. The result will be rising inflation, higher unemployment, and a central bank torn between its dual mandates. With key economic indicators pulling in opposite directions, the Fed faces a new storm.

Powell's remark that monetary policy is currently "in the right place" convinced investors that the Fed is not throwing out a lifeline. Neither is the White House. And if that is the case, the S&P 500 could be headed right back into bear territory.

After all, the trade war is just getting started and its effects could be long-lasting. The US government's demand that NVIDIA obtain a license to sell chips to China triggered a sell-off in the tech giant's stock. Markets immediately priced in a revenue slowdown. Meanwhile, Beijing hit back with restrictions on Boeing aircraft purchases and laid out conditions for returning to the negotiating table.

Bad news for the S&P 500 is coming from all directions. The World Trade Organization slashed its 2025 global trade growth forecast by 0.2%, a far cry from the 2.7% it predicted before Washington's Independence Day tariffs. And this could be just the beginning. If the US goes further, trade could shrink by as much as 1.5%.

International trade dynamics

This image is no longer relevant

This image is no longer relevant

Supply chain disruptions are bad for business. So is uncertainty. And what is bad for business is dreadful for the economy. Is a recession closer than it seems?

Technically, on the daily chart, the failure of bulls to hold the critical 5,400 pivot has exposed weakness and triggered selling. A break below the 5,225 and 5,200 support levels would pave the way for adding to existing short positions. A return to buying only makes sense if the broader equity benchmark can rise above 5,400 or, better yet, 5,455.

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

US Dollar. Weekly Preview

The U.S. economic calendar for the upcoming week won't be overloaded with data. If we leave out the secondary reports, only April's Consumer Price Index (CPI) remains, which will

Chin Zhao 00:59 2025-05-12 UTC+2

British Pound. Weekly Preview

The wave pattern of the pound and the market's interest in the news currently reflect those of the euro. Last week, the market had a chance to reduce demand

Chin Zhao 00:59 2025-05-12 UTC+2

Euro Currency. Weekly Preview

Will the news background have any real significance in the upcoming week? In my opinion, the market seems largely uninterested in economic and fundamental data. Consider this: major events like

Chin Zhao 00:59 2025-05-12 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are showing a positive trajectory after an intraday decline to the $3275–3274 level. The renewed demand for safe-haven assets is driven by geopolitical risks, including the prolonged conflict

Irina Yanina 18:52 2025-05-09 UTC+2

DXY. The Dollar Holds Out Hope for a Recovery

Today, the U.S. Dollar Index (DXY), which tracks the greenback's performance against a basket of major currencies, is in a phase of bullish consolidation after reaching an almost one-month high

Irina Yanina 11:31 2025-05-09 UTC+2

Markets Will Open Their Eyes and Close Their Ears

"Better go and buy stocks right now! Thanks to the White House's trade policy, the U.S. will attract $10 trillion in investment. This country will be like a rocket going

Marek Petkovich 11:10 2025-05-09 UTC+2

The U.S. and U.K. Sign a Trade Agreement

The British pound fell in response to the news that the U.S. and the U.K. had signed a trade agreement. However, there are many nuances that need to be clarified

Jakub Novak 09:31 2025-05-09 UTC+2

Has Everyone Started Believing Trump Again?

The U.S. dollar resumed its upward trajectory, while several risk assets dropped sharply after U.S. President Donald Trump stated that he expects the upcoming trade talks with China, scheduled

Jakub Novak 09:28 2025-05-09 UTC+2

The European Union Prepares New Tariffs Against the United States

It has come to light that the European Union is planning to impose additional tariffs on U.S. exports worth €95 billion if current trade negotiations with President Donald Trump's administration

Jakub Novak 09:25 2025-05-09 UTC+2

GBP/USD Overview – May 9: The Bank of England Confuses Traders Even More

The GBP/USD currency pair moved downwards first and then upwards on Thursday, indicating that the market has not yet decided how to interpret the Bank of England's meeting results

Paolo Greco 04:05 2025-05-09 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback