empty
20.01.2025 09:02 AM
The Market Finds Shelter

The S&P 500 achieved its best weekly performance since the November U.S. presidential election, just before Donald Trump's inauguration. Initially, investors worried that his protectionist policies could negatively impact the U.S. economy. However, they now believe that the potential benefits from deregulation and fiscal stimulus will outweigh the drawbacks. Is this wishful thinking?

The broad market index surged by 4.7% during the week ending January 17, fueled by a strong start to the corporate earnings season and a 0.2% month-over-month decline in core inflation in the U.S. Major banks such as JP Morgan, Goldman Sachs, and Citigroup reported positive fourth-quarter earnings, alleviating investor concerns. The likelihood of the Federal Reserve refraining from rate cuts in 2025—or even increasing rates—has decreased, boosting confidence in two expected monetary easing actions this year. Federal Open Market Committee (FOMC) official Christopher Waller even suggested the possibility of easing monetary policy in March.

Weekly S&P 500 Performance

This image is no longer relevant

Bank of America suggests that U.S. equities could benefit from Donald Trump's return to the White House. During his first term, Trump viewed the performance of U.S. stock indices as a measure of his effectiveness, and it is unlikely that this perspective will change from 2025 to 2028. UBS Global Wealth Management estimates a 9% increase in corporate earnings this year, which could push the S&P 500 to 6,600.

According to Jefferies, since 1929, the S&P 500 has historically followed a zigzag pattern during presidential inaugurations, averaging gains of 8.3% and 9.5% six and twelve months, respectively, after a new president takes office.

In the early days of Trump's second term, investors will consider the impacts of tariffs and anti-immigration policies alongside the potential benefits of fiscal stimulus and deregulation. It appears that the new president may begin by implementing import tariffs, setting this term apart from his previous one.

Market Expectations for Fed Policy

This image is no longer relevant

During his term from 2017 to 2020, Trump stimulated the economy through tax cuts but later resorted to tariffs and trade wars, which ultimately slowed down growth. This time, the sequence may be reversed. Import tariffs are likely to accelerate inflation and hinder economic growth, even though the current outlook remains strong. For example, the IMF predicts that U.S. GDP will grow by 2.8% in 2024. Consequently, uncertainty regarding the Federal Reserve's policy stance could increase, with derivatives currently indicating a 25% probability of a federal funds rate hike.

On the daily chart, the market illustrated the principle: "If the market does not move as expected, it is likely to move in the opposite direction." After an unsuccessful attempt to break below the lower boundary of the triangle, the market successfully breached the upper boundary. A strong test of resistance at 6010 could justify expanding long positions that were initiated at 5930.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Igor Kovalyov
Start trade
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

EU Prepares to Retaliate

Over the weekend, it was revealed that the United States will impose 30% tariffs on all goods from the European Union starting August 1. In response, the EU is preparing

Jakub Novak 11:21 2025-07-14 UTC+2

Trump Continues to Pressure U.S. Trade Partners (Potential Resumption of USD/JPY and Ethereum Growth)

The United States, through its president, continues to exert economic—and arguably geopolitical—pressure on its trade partners, which is having a ricochet effect on global trade and financial markets. But, oddly

Pati Gani 10:00 2025-07-14 UTC+2

Do Markets Like Tariffs?

Everyone sees what they want to see. For Donald Trump, the S&P 500 rally to record highs is proof that the market likes tariffs. For investors, it's a sign

Marek Petkovich 09:06 2025-07-14 UTC+2

What to Pay Attention to on July 14? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Monday. Let us recall that last week, there were also no significant reports, speeches, or any other notable events in either the European

Paolo Greco 06:30 2025-07-14 UTC+2

GBP/USD Overview – July 14. Keep Calm and Carry On

The GBP/USD currency pair showed a rather significant decline on Friday. Overall, the British currency has been falling for two weeks now, and this is a very important fact that

Paolo Greco 04:33 2025-07-14 UTC+2

EUR/USD Overview – July 14. The Fed's and Trump's Positions Remain Unchanged

The EUR/USD currency pair continued a mild and weak downward movement on Friday. As we have mentioned many times before, the current move is a pure correction, so there

Paolo Greco 04:33 2025-07-14 UTC+2

The Dollar Is Becoming a Risk Currency

In my reviews, I've regularly noted that the decline in demand for the U.S. dollar is not just a matter of price depreciation. We're talking about a currency that

Chin Zhao 00:42 2025-07-14 UTC+2

The Market Believes Trump Will Back Down

What is happening in the financial markets right now can only be described as a paradox, and many economists are noting it. Take the U.S. stock market, for example: initially

Chin Zhao 00:42 2025-07-14 UTC+2

EUR/USD. Weekly Preview: U.S. Inflation, Retail Sales, ZEW Indices, and China's GDP

The upcoming trading week will be marked by U.S. inflation data. Reports on CPI and PPI growth will be released, along with the University of Michigan Consumer Sentiment Index. However

Irina Manzenko 00:41 2025-07-14 UTC+2

U.S. Dollar. Weekly Preview

In the upcoming week in the U.S., reports on inflation and industrial production will be released, along with a few other moderately interesting indicators. The most important one is undoubtedly

Chin Zhao 00:41 2025-07-14 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.