S&P 500 Forecast: SPX rebounds on trade tariff negotiation optimism

US futures

Dow future 2.70% at 38995

S&P futures 2.3% at 5184

Nasdaq futures 2.3% at 17838

In Europe

FTSE 3.2% at 7912

Dax  2.49% at 20250

• Stocks rise on hopes that Trump is prepared to negotiate
• Treasury Secretary to lead negotiations in Japan,
• But Trump doubles down on China
• Oil steadies at a 4-year low

Trump willing to negotiate?

U.S. stocks are set to open higher after heavy volatility yesterday as the market attempted to asses the path forward for Trump’s trade tariffs.

After a chaotic session, reflecting Trump’s chaotic approach to policy, the three main Wall Street indices ended the day almost flat. The VIX, the fear gauge for Wall Street, spiked to 60, levels not seen since the pandemic, and volumes traded were the highest in almost two decades, at 29 billion shares.

Today’s move higher comes as the S&P 500 has lost over 10% across the past three sessions and on hopes that Trump could be willing to negotiate, although not with China.

Whilst Treasury Secretary Scott Bessant is set to lead negotiations in Japan, Trump doubled down on China. Trump threatened an additional 50% trade tariff on China if China failed to withdraw its 34% retaliatory tariff on the US.

Attention will be on Jamieson Greer in front of the Senate Committee later today for further clarity on the outlook for trade policy.

The US economic calendar is quiet today. Chicago Fed President Austan Goolsbee warned that businesses are anxious about the tariffs and that the central bank will look at hard data in its policy response. This means a move by the Fed to cut rates imminently is unlikely, particularly given that Friday’s NFP headline job creation was stronger than expected.

For the markets to stage a sustained recovery, Trump would need to walk back some tariffs, negotiate lower rates or the Fed cut rates more aggressively.

Corporate news

Levi jumped 11% after reiterating its full-year outlook; however, this excludes any impact from recently announced White House tariffs. The company posted Q1 EPS of 38 cents, 52% higher than a year ago, on revenue of $1.53 billion.

Health insurers are on the rise after reports that the Trump administration will increase payment rates for Medicare insurers to 5.06% from 2.3%, previously CVS Health and United Health.

Broadcom is up 3% as the chipmaker loves a 10 billion share buyback programme and that confidence in the strength of its diversified semiconductor and infrastructure software.

S&P 500 forecast – technical analysis.

The S&P 500 has recovered from a 14-month low back above 5000 to current levels of 5190, bringing the RSI out of overbought territory. The long lower wick suggests there was little selling demand at the lower levels. However, bulls have a long way to go before gaining control. The recovery would need to rise above 5520 to negate the downtrend, with a rise above 5775 required to create a higher high. Support is seen at 5000, with a break below here opening the door to 4800, yesterday’s low.

FX markets – USD rises, GBP/USD falls

The USD is falling after two days of gains as the market mood calms from recent volatility. Optimism that Trump will enter negotiations is helping to support the mood. Currencies have been very volatile as investors try to assess the impact of Trump’s trade tariffs and recession risks. Recession worries have offset the USD safe-haven demand.

The EUR/USD is rising but is struggling to make meaningful headway. The EU is in talks with Washington, offering zero to zero tariffs on cars. The eurozone economic calendar is quiet. Concerns over the growth outlook and more ECB rate cuts could limit EUR upside.

The GBP/USD is rising as the improved risk mood helps the pound capitalise on the weaker USD. However, with the market pricing in more aggressive BoE rate cuts this year, gains in GBP could be limited.

Oil steadies at a 4-year low

Oil prices are holding steady at multi-year lows after steep losses in recent sessions, amid escalating fears of a full-blown trade war between the US and China.

Oil has fallen 15% since April 2, when Trump announced reciprocal trade tariffs, which were soon followed by retaliation from China.

The increasingly hostile tine between the world’s largest consumers of oil, combined with rising recession fears, is hurting the demand outlook.

The selloff has steadied today, thanks to the improved risk tone in the market and rising equties.

The US will also begin direct talks with Tehran, which, if successful, could eventually result in increased supply to the market.