Traders model bullish moves for S&P 500 with tariff tensions easing
(Bloomberg) — The reprieve in US-China trade tensions that sent stocks soaring on Monday has chart watchers anticipating fresh all-time highs for the S&P 500 Index (^GSPC).
A New Central Park Amenity, Tailored to Its East Harlem Neighbors
What's Behind the Rise in Serious Injuries on New York City's Streets?
NYC Warns of 17% Drop in Foreign Tourists Due to Trump Policies
LA Mayor Credits Trump on Fire Aid, Stays Wary on Immigration
Lawsuit Challenges Trump Administration Policy on Migrant Children
The gauge closed above 5,750 — its 200-day moving average — for the first time since late March. According to John Kolovos, chief technical strategist at Macro Risk Advisors, there are now no more major resistance levels left until 6,144, the record high the S&P 500 hit on February 19.
So-called resistance levels occur at points where a bullish trend is expected to pause as selling surpasses buying. A break above those levels indicates a shift in sentiment.
Subscribe to the Bloomberg Daybreak Podcast on Apple, Spotify and other Podcast Platforms.
'The S&P 500 (^GSPC) trading above the 200-day moving average is another indication that the trend is turning positive,' Kolovos said. 'This increases the odds that pullbacks will be met with increased demand or buying interest. It changes your strategy and sends the signal that we're done with the bear market.'
Major US indexes have already erased the losses they suffered since April 2, when President Donald Trump announced sweeping levies on imports, and are within 1% from wiping out their declines this year. Investors are now seeing the easing of trade tensions between the US and China as evidence of the Trump administration tempering their aggressive tariff policies.
The latest setup for the S&P 500 has changed how aggressive dip buyers could be if the stock market retreats from where it currently stands — because they expect equities to only rally further.
Chart watchers are already modeling what the next bullish levels will be if the S&P 500 breaks above its all-time high.
To Kolovos, it would pave the path for the index to hit 6,600. JC O'Hara, chief technical strategist at Roth Capital Partners, sees the next target being 6,450, followed by 6,645, implying a gain of more than 10% above Monday's close.
Even so, if history is any guide, a move above the 200-day moving average doesn't guarantee that stocks could move higher.
Nearly two-thirds of 14 S&P 500 bear markets since the World War II started with a double digit decline and recovered to within 2% or higher of the 200-day moving average — only to plunge once again around even lower levels, according to Sam Stovall, chief investment strategist at CFRA.
That strengthens the case for technical analysts to continue to watch so-called support levels, at which stock indexes typically bounce as they indicate potential buying. Last week's high of 5,720 has turned into a major support level and a potential move below 5,580 would force the index to retest the 5,425 level, Kolovos said.
Aggregate equity positioning is still only slightly above the bottom of its longer-run range going back to 2010, according to Deutsche Bank Securities (DB) strategist Parag Thatte. That means investors that cut their positions to stocks because of tariff-driven uncertainty would need to boost their exposure if they want to participate in a rally.
Bullish trends are already shaping up across systematic funds, which follow market direction and technical indicators.
Commodity trading advisors, or CTAs, are likely turning long on US equities after the market rallied through key momentum levels on Monday, JPMorgan Chase & Co.'s (JPM) Bram Kaplan wrote in a Monday note.
Any upcoming short-term dip will likely be bought, not sold, said Craig Johnson, chief market technician at Piper Sandler.
''Pain trade' is now up as the sentiment has changed and the worst case scenario in form of deteriorating corporate earnings is likely not going to happen,' he said.
The Recession Chatter Is Getting Louder. Watch These Metrics
US Border Towns Are Being Ravaged by Canada's Furious Boycott
Two Million Meat Sticks a Day Isn't Enough for Chomps' CEO
Maybe AI Slop Is Killing the Internet, After All
With the New York Liberty, Clara Wu Tsai Aims for the First $1 Billion Women's Sports Franchise
©2025 Bloomberg L.P.
By subscribing, you are agreeing to Yahoo's
Terms
and
Privacy Policy
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
22 minutes ago
- Yahoo
Trading Day-London calling, stocks crawling higher
By Jamie McGeever ORLANDO, Florida (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Trade tensions, policy uncertainty and shaky economic data continue to cloud the near-term outlook for world growth, but they remain on the back burner for now as investors kick off the week by pushing global stock markets higher. In my column today I look at why the dollar has depreciated significantly this year regardless of how U.S. stocks and bonds have performed. The main reason? Hedging. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Defying debt warnings, Republicans push forward on Trumptax agenda 2. 'Blue' euro bonds to rival Treasuries?: Mike Dolan 3. Japan to consider buying back some super-long governmentbonds, sources say 4. Wall Street, Main Street push for foreign tax rethink inU.S. budget bill 5. Auto companies 'in full panic' over rare-earthsbottleneck Today's Key Market Moves * World stocks set a new record high. The MSCI World indexrises 0.3% to 895.60 points. * Wall Street closes in the green despite a flurry of lateselling, and the S&P 500 nudges further above 6000 points. TheRussell 2000 small caps index rises most, up 0.6%. * The dollar index slips 0.25%. But the biggest declinerin global FX on Monday is the Colombian peso, down 0.7% afterthe assassination attempt on Senator Miguel Uribe, a potentialpresidential contender. * The U.S. yield curve bull steepens, snapping four sessionsof flattening, with the 2- and 3-year yields down 4 bps. Nextup, a $58 billion auction of 3-year notes on Tuesday. * Oil rises for a third day, with Brent crude climbing 1%above $67/bbl, its highest level since late April. London calling, stocks crawling higher It was a fairly quiet start to the week across global markets on Monday, with strong equity gains in Asia followed by a grind higher on Wall Street which lifted the MSCI World index to a fresh record high. The main areas of focus for investors were China's economic 'data dump' for May, then the high-level U.S.-China trade talks in London. The two are connected - the U.S. is a less important market for China than it used to be, underscored in May's trade figures from Beijing and reflected in the lack of concrete progress from the negotiations in London. China's total exports rose 4.8% in May from a year earlier but this masks a huge split between the U.S. and the rest of the world. Exports to the U.S. plunged 34.4% year-on-year in value terms, the sharpest drop since February 2020 just before the pandemic, while exports to the rest of the world rose 11.4%. Monthly data are volatile, of course, and May's figures were also distorted by tariffs. Still, U.S.-bound shipments worth $28.8 billion last month were just 9% of the total $316 billion. Economist Phil Suttle notes that is less than half the average share in the decade leading up to President Donald Trump's first trade war. The London talks are expected to continue on Tuesday. But as was the case following Trump's telephone call with Chinese leader Xi Jinping on Thursday, there is little indication of a significant breakthrough, far less China bending to U.S. demands. "U.S. Treasury Secretaries who live in unbalanced economies might not want to throw barbs such as the 'most unbalanced in modern history' at China without first looking at some data," Suttle wrote on Monday. "The choice to fight an opponent should be conditioned on a clear-headed view of its strengths and weaknesses. The U.S. has done a marvelous job of (once again) deluding itself on this front," Suttle added. Still, divisions between the two countries and the threat to global supply chains are proving no barrier to rising stock markets. Japan's Nikkei and the MSCI emerging and Asia ex-Japan indexes rose around 1%, Hong Kong-listed tech stocks rose nearly 3%, and Wall Street closed in the green. Meanwhile, the dollar's trend this year of declining despite U.S. stocks and bonds rising was on full display on Monday. Wall Street closed slightly higher and Treasury yields fell as much as 5 basis points at the short end of the curve, yet the dollar slipped. Many analysts say one of the main reasons for this is non-U.S. investor hedging - more on that below. Dollar floored as investors seek that extra hedge All three major U.S. asset classes – stocks, bonds and the currency – have had a turbulent 2025 thus far, but only one has failed to weather the storm: the dollar. Hedging may be a major reason why. Wall Street's three main indices and the ICE BofA U.S. Treasury index are all slightly higher for the year to date, despite the post-'Liberation Day' volatility, while the dollar has steadily ground lower, losing around 10% of its value against a basket of major currencies and breaking long-standing correlations along the way. The dollar was perhaps primed for a fall. It's easy to forget, but only a few months ago the 'U.S. exceptionalism' narrative was alive and well, and the dollar scaling heights rarely seen in the past two decades. But that narrative has evaporated, as U.S. President Donald Trump's controversial economic policies and isolationist posture on the global stage have made investors reconsider their exposure to U.S. assets. But why is the dollar feeling the burn more than stocks or bonds? PENSION FUND-AMENTALS Non-U.S. investors often protect themselves against sharp currency fluctuations via the forward, futures or options markets. The difference now is that the risk premium being built into U.S. assets is pushing them – especially equity holders – to hedge their dollar exposure more than they have in the past. Foreign investors have long hedged their bond exposure, with dollar hedge ratios traditionally around 70% to 100%, according to Morgan Stanley, as currency moves can easily wipe out modest bond returns. But non-U.S. equity investors have been much more loath to pay for protection, with dollar hedge ratios averaging between 10% and 30%. This is partly because the dollar was traditionally seen as a 'natural' hedge against stock market exposure, as it would typically rise in 'risk off' periods when stocks fell. The dollar would also normally appreciate when the U.S. economy and markets were thriving – the so-called 'Dollar Smile' – giving an additional boost to U.S. equity returns in good times. A good barometer of global 'real money' investors' view on the dollar is how willing foreign pension and insurance funds are to hedge their dollar-denominated assets. Recent data on Danish funds' currency hedging is revealing. Danish funds' U.S. asset hedge ratio surged to around 75% from around 65% between February and April. According to Deutsche Bank analysts, that 10 percentage point rise is the largest two-month increase in over a decade. Anecdotal evidence suggests similar shifts are taking place across Scandinavia, the euro zone and Canada, regions where dollar exposure is also high. The $266 billion Ontario Teachers' Pension Plan reported a $6.9 billion foreign currency gain last year, mainly due to the stronger dollar. Unless the fund has increased its hedging ratio this year, it will be sitting on huge foreign currency losses. "Investors had embraced U.S. exceptionalism and were overweight U.S. assets. But now, investors are increasing their hedging," says Sophia Drossos, economist and strategist at the hedge fund Point72. And there is a lot of dollar exposure to hedge. At the end of March foreign investors held $33 trillion of U.S. securities, with $18.4 trillion in equities and $14.6 trillion in debt instruments. RIDING OUT THE STORM The dollar's malaise has upended its traditional relationships with stocks and bonds. Its generally negative correlation with stocks has reversed, as has the usually positive correlation with bonds. The divergence with Treasuries has gained more attention, with the dollar diving as yields have risen. But as Deutsche Bank's George Saravelos notes, the correlation breakdown with stocks is "very unusual". When Wall Street has fallen this year the dollar has fallen too, but at a much faster pace. And when Wall Street has risen the dollar has also bounced, but only slightly. This has led to the strongest positive correlation between the dollar and S&P 500 in years, though that's a bit deceptive, as the dollar is sharply down on the year while stocks are mildly stronger. Of course, what we could be seeing is simply a rebalancing. Saravelos estimates that global fixed income and equity managers' dollar exposure was at near record-high levels in the run-up to the recent trade war. This was a "cyclical" phenomenon over the last couple of years rather than a deep-rooted structural one based on fundamentals, meaning it could be reversed relatively quickly. But, regardless, the dollar's hedging headwind seems likely to persist. "Given the size of foreign holdings of both stocks and bonds, even a modest uptick in hedge ratios could prove a considerable FX flow," Morgan Stanley's FX strategy team wrote last month. "As long as uncertainty and volatility persist, we think that hedge ratios are likely to rise as investors ride out the storm." What could move markets tomorrow? * South Korea current account (April) * UK BRC retail sales (May) * UK employment (April) * Brazil inflation (May) * U.S. 3-year Treasury note auction Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever; Editing by Nia Williams) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23 minutes ago
- Yahoo
Mom buys product she thought was U.S.-made, but warns of misleading labels
As President Trump's trade war continues, some consumers are searching for products made in the U.S. When Mary Schubart set out to buy bedding for her twins heading off to college, she was looking for products that were safe, provided comfort and, if possible, she wanted to buy American-made. "I like the idea of buying to support the local economy, but my overriding concern was safer," Schubart said. Schubart said she thought she found the perfect mattress pads from Pottery Barn Teen. It was advertised online as "crafted in the USA," but when they arrived, she was surprised to see one of the tags read "made in China." "I knew it is one of the countries that has less stringent regulations pertaining to health and pertaining to final product production, so I was disappointed," she said. Schubart reported her findings to Truth in Advertising, a nonprofit watchdog group that investigates when companies make false claims. Laura Smith, the Truth in Advertising legal director, said they had already flagged false claims by Pottery Barn Teen to the Federal Trade Commission. "We had found 800-plus examples of products marketed as 'made in the USA' or 'crafted in America' when they were actually imported," Smith said, of the merchandise found on seven William Sonoma websites in 2019. Schubart's complaint led to the largest "Made in the USA" civil penalty in history, with more than $3 million against Williams Sonoma, the parent company of Pottery Barn Teen. In a statement, Williams Sonoma apologized for what it called an "administrative mistake," saying, "Last year, we received an FTC fine due to an unintentional administrative mistake associated with the online product descriptions of seven items we sell. We are deeply sorry for any confusion that may have been caused by the inaccurate information that was shared, and we have improved our processes to help prevent similar incidents in the future." "Civil penalties, as long as they're more than a slap on the wrist, they can have a real impact. But it needs to be a fine that's big enough to hurt," Smith said. What qualifies as "Made in the USA?" The Federal Trade Commission requires that products advertised as "Made in the USA" be all or virtually all manufactured domestically. Plus, the ingredients or components must be made and sourced in the United States, which is the issue in a current lawsuit against Reynolds Aluminum foil for its "Made in the USA" label. The suit claims the product's key raw material, Bauxite, is not mined in the U.S. Reynolds says the claims have no merit and it will defend the case. How to know if a product is American-made Amid Mr. Trump's tariffs on certain products, some companies have said they plan to invest more in U.S. manufacturing. To verify if a product is "Made in the USA," check the label for that exact wording. Beware of qualifying language like "Assembled in the USA" or "with imported parts." If you're unsure, consumers can verify with the brand by going to its website or calling directly. Australian reporter covering Los Angeles protests shot with rubber bullet by police officer Kristi Noem says "we are not going to let a repeat of 2020 happen" amid L.A. crackdown Magic in the dark: The fantastical worlds of Lightwire Theater
Yahoo
30 minutes ago
- Yahoo
Here is what the markets need to power higher this year
Markets have been roiled by tariff uncertainty and what will happen with President Trump's "big beautiful" tax bill. In the video above, US Bank Asset Management Group national investment strategist Tom Hainlin explains that clarity on these sorts of issues would help take the markets higher in the second half of 2025 and into 2026. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Sign in to access your portfolio
