S&P 500 Forecast: SPX eases from record highs with trade and fiscal policies in focus

US futures

Dow futures -0.02% at 44059

S&P futures -0.23% at 6188

Nasdaq futures -0.3% at 22605

In Europe

FTSE -0.30% at 8745

DAX -0.78% at 23750

• US stocks ease from record levels
• Trade deals are slow to come through
• The Senate is still voting on Trump’s tax and spending bill
• Oil steadies ahead of the OPEC+ meeting

US trade & Trump’s bill in focus

US stocks are poised for a softer start on Tuesday, following a record run for US indices, as investors shift their attention to trade talks and the Senate vote on Trump's tax and spending bill.

The S&P 500 and the Nasdaq rose to a record closing high on Monday following their best quarter in years, on hopes of more trade deals and possible rate cuts, which supported sentiment.

The US Senate is still voting on a potentially lengthy list of amendments to Trump's big beautiful bill, which is expected to add $3.3 trillion to the nation's debt. The fact that the Republicans are struggling to pass the bill, despite having a majority, highlights the deep divisions within the party over its impact on the debt pile.

With the July 9 deadline approaching, trade deals remain incomplete, and Trump has expressed frustration with Japan over trade negotiations. There does seem to be a mismatch between how the markets are positioned on the risk relating to Trump's trade tariffs and fiscal bill.

Attention is now turning to US data, with the ISM manufacturing activities survey expected to rise to 48.8, up from 48.5. Meanwhile, job openings are expected to slow further to 7.3 million, down from 7.39 million. The data comes ahead of Friday's nonfarm payroll report, and as the market has raised its expectations for a Fed rate cut to 80% in September, up from 70% a week ago.

Corporate news

Tesla is dropping over 4% after President Trump escalated his feud with CEO Musk, accusing him of benefiting excessively from government subsidies. Trump called for a review of Tesla’s Federal help..

Meta trades around a record high after announcing the restructuring of its AI group and committing to developing AI superintelligence. Zuckerberg announced plans to invest hundreds of billions in AI projects and research over the years to come and hired 11 new researchers and engineers from companies such as OpenAI and Google to join their Metre superintelligence labs team.

S&P 500 forecast – technical analysis.

The S&P 500 has extended gains to fresh record highs at 6214. The RSI is tipping into overbought territory, so there could be some consolidation around here. With blue skies above, 6250 and 6300 are the next levels to be watching for. Support can be seen at 6150, the February high, and below here at 6050 and 6000. A break below 5930 is needed to create a lower low.

FX markets – USD falls, EUR/USD rises

The USD is falling amid uncertainty over U.S. trade and fiscal policies. Trump's 90-day pause in reciprocal tariffs and other measures, announced on July 9th, comes as the Senate is still voting on Trump's tax and spending bill, which could add $3.3 trillion to the US debt.

The EUR/USD is rising above 1.1812 to fresh four-year highs after eurozone inflation rose to 2%, up from 1.9%, hitting the ECB's target level and reinforcing the view that the ECB's rate-cutting cycle could be nearing its end.

GBP/USD is rising to 1.3750, boosted by broad USD weakness. The GBP USD performed strongly, with its strongest quarterly gain since Q3 2022, as attention focuses on the UK parliament for a highly contested welfare bill that could test the stability of the Labour government. A failure to pass the bill could hit sterling and gilts, as further concessions may be required, given the limited fiscal headroom.

Oil looks to the OPEC+ meeting.

Oil prices are holding steady on Tuesday as attention turns towards the OPEC+ meeting later this week, on July 6.

Expectations are that the oil cartel will announce a further 411k barrels per day production hike. This is partly offset by optimism surrounding trade deals, which could help improve the demand outlook. APAC plus announced similar hikes in May, June, and July, so it would bring OPEC prices' total supply increase year to date to 1.78 million, which equates to around 1.5% of global oil demand

. Investors are also watching Trump's July 9 deadline for clues about the demand outlook. High tariffs could dent growth