S&P 500 Index
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- Metadoro first
Our concept of using any tariff-driven lows as buying opportunities comes down to yield results. From February to May, and supposedly through the coming summer, it is still relevant to buy out people's fears for global economic wars, at the particular moments when the crowd loses faith in peace deal settlements over time. The S&P 500 broad market barometer has been under remaining pressure on Friday, based on U.S. president Trump's reignition of trade concerns after he recommended a possible 50% tariff on EU goods for his negotiators and also threatened Apple to impose duties on all foreign-made iPhones.
"The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with... Our discussions with them are going nowhere!" Trump proclaimed on Truth Social just before the weekend. Weak demand at an auction of 20-year public bonds was also cited, so that fears prevailed even as a sweeping and very encouraging U.S. tax cut and spending bill cleared the House procedures to enter the Senate. The major Wall Street index slid to a re-test of the 5,750 area before the very end of the week. Yet the firm bulls, including our analyst team, were strongly aware that these were all cheap excuses, and the overall sentiment actually took a 180-degree turn as soon as Trump quite predictably agreed to delay his 50% trade tariffs threat against the EU bloc by another month to early July.
“I received a call today from Ursula von der Leyen, President of the European Commission, requesting an extension on the June 1st deadline on the 50% Tariff with respect to Trade and the European Union. I agreed to the extension — July 9, 2025 — It was my privilege to do so,” Trump updated his current view in a post on the same Truth Social. The U.S.-EU talks will “begin rapidly”, he added, while Mrs von der Leyen said she had a “good call” with Trump, so that Europe is now ready to advance talks “swiftly and decisively”. Isn't it a noticeable turn in rhetoric and a big step forward after all those boring phrases that talks were not progressing? As a result, the Wall Street S&P 500 index futures jumped by more than 1% immediately in the first trading hour to 5,850, and then added another 0.25% to 5,875 in Asian and European time. This means more than 100 basis points up already, and we have no doubt about a well-planned assault on the 6,000 psychologically important height, with the leadership of technological flagships like Google, Meta and Microsoft, as well as the e-commerce giants led by Amazon and the industrial sector as the most exposed to trading tensions, but now potentially the happiest one.
There is also a moderate positive shift on the interest rate side, as the U.S. Federal Reserve's governor Christopher Waller said last Thursday he saw a path to rate cuts "later this year", in case "we can get the tariffs down close to the 10% and then that’s all sealed, done and delivered somewhere by July, then we’re in good shape for the second half of the year, and then we’re in a good position to kind of move with rate cuts through the second half of the year". So, slowly and steadily wins this marathon stock race. We should also mention here that the US and China agreed to a de-escalation in May as well. But if the Chinese market is still subject to much volatility moves, and is still potentially problematic, the German DAX index is quietly hitting peaks in Europe again.
S&P 500 Index
As it is the most commonly used stock index it has some unique features a trader should keep in mind:
- The index represents the broad stock market performance since it lists companies from various sectors. It is not focused on specific industries or segments like the Dow Jones index family and the Nasdaq index. So, it is often called a “barometer of American economy;
- There are different sectors inside the index, which represent companies from familiar and particular sectors. According to numbers released on May 31, 2023 the smallest sector by market cap is Materials with a share of 2.4% (all numbers are given as of May 31, 2023), while the largest is Information technology with 28% of the index market cap. The index also lists companies from healthcare, financials, consumer discretionary, communication services, industrials, consumer staples, energy, utilities, and real estate. A sector breakdown allows investors to distinguish the best performing sectors and select the best performing stocks inside the sector. It also allows for the evaluation of economic performance of the United States in General and for a look at what is driving the American economy;
- The index is very sensitive to macroeconomic data, and positively reacts to rising GDP, retail sales, investments, and the phase in which houses are being built. Any negative news in these areas may push the index down. Macroeconomic data may have a sustainable effect on the index as declining GDP will put sustainable pressure on it, and vice versa;
- The index is very sensitive to the monetary policy decisions of the Federal Reserve (Fed). Rising interest rates and increasing borrowing costs result in less money in the economy and this leads to lower corporate margins, lower consumer and investment demand, and eventually to lower investments in stocks. So, the Fed’s hawkish stance usually results in a weaker S&P 500 index. A dovish monetary policy by the Fed usually supports the index. Thus, the Fed’s interest rate actions, testimonies of its head and FOMC voting members should be monitored;
- The Consumer Price Index (PCI) and the Personal Consumption Expenditures Price Index (PCE) data, which represent inflation, affect the index. If the numbers are far from the Fed’s target, which is set at 2%, it may signal to the possibility that the Fed may continue with its hawkish stance, meaning pressure on the S&P 500 index. Any increase of inflation means the pressure will rise. If inflation slows down to below the 2% target, it is likely to push the index up;
- The S&P 500 index is a risky asset as it represents the sentiment in the market, and the appetite for risk. A rising appetite for risk supports the index, while uncertainty, which lowers economy and geopolitical risks, put pressure on it;
- The index has a negative correlation with the USD/JPY as the Japanese Yen is regularly used for carry trading. So, a deteriorating Yen may signal to a decline of the index;
- The S&P 500 is a very popular asset for investments. An individual may invest in S&P futures, CFD’s of ETF’s that are linked to the index. This is a very diversified asset, and is suitable for conservative investors as it has lower volatility than any of its components, or even currencies or commodities. Thus, the index may serve as a hedge asset inside an investment portfolio;
- The index is linked to the U.S. stock market’s opening hours, but futures and CFD trading on the index continues mostly throughout 24/5, excluding weekends. So, the index may open with a gap if something very important has happened during a weekend.
| Ticker | US500 |
| Contract value | 10 USD x US500 Index |
| Maximum leverage | 1:100 |
| Date | Short Swap (%) | Long Swap (%) | No data |
|---|
| Minimum transaction volume | 0.01 lot |
| Maximum transaction volume | 100 lots |
| Hedging margin | 50% |
| USD Exposure | Max Leverage Applied | Floating Margin |
|---|
