S&P 500 Index
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- Metadoro first
Major world market indices tend to ignore the impact of U.S. president Donald Trump's trade war actions. The investment community calmly digested his announcement of 25% tariffs on all steel and aluminium imports to the U.S., just a few days after unsurprising 10% on China's goods. The metal tariffs will be added to current levies, which Trump already imposed during his first term, as the measures were partially retained by the Biden administration. As a result, the S&P 500 broad barometer of Wall Street stopped climbing around 6,100 for going backwards last Friday's evening on February 7 and began regular trading on February 10 just one step below the psychologically important figure of 6,000, particularly at 5,992.80. However, it ended the regular session at 6,065.50, which represented a gain of more than a full percentage point. These same types of smoothed-out effects were seen during Trump's first term. Mutual protectionist measures clearly limited global economic growth in 2017-2019, but did not prevent the stock market rally from developing further to new record highs. At that time, the U.S. S&P 500 has grown from nearly 2,250 to almost 3,400 points. In 2025, the capital flight from accumulated inflation seems to be equal to a scorched earth effect under the feet of rich and middle class who previously held conservatively to cash deposits and Treasury notes, and now enhancing their stakes in sustainable businesses and pushing risk-on buttons for the artificial intelligence as well as various big data and cloud tech names.
Investors may be hoping that Trump's tough first steps are more of a bid to open subsequent trade talks with more balanced end-terms. Just new positioning for the new division of our small world. If so, then some relief may be offered at least to Mexico and Canada as immediate neighbours. As an example, Trump already postponed actually imposing 25% tariffs on these two major suppliers for the U.S. industries. Trump's team also granted quotas for exemptions from initial tariffs during his first term, for particular countries, and then struck a "big deal" with China based on concessions from hard-line starting positions. We consider the idea of markets expecting similar scenarios here and now.
It seems, however, that the degradation of the purchasing value of depreciated dollars and euros, as a result of the intense previous activity of the printing press in the COVID times, as well as printing money because of geopolitical tensions and internal problems, is simply a much stronger driver of buying more stocks despite climbing indexes compared to the negative factor of tariff battles. January inflation may push the S&P 500 even more upstairs if signs of cooling price growth will be demonstrated on a MoM or YoY basis. But even sticky inflation pressure scenarios would result in some delay in the bullish race, though reversal patterns on charts could currently be excluded from being considered.
Even though the leading EU economies are clearly unhappy with the prospect of Trump's nearly promised tariffs for the EU as well, European stock markets continue to grow as if nothing had happened. Although German industrial companies are suffering from expensive energy supplies, the German DAX 40 index of blue chips (GER40) is at new historical highs and only a hundred points away from the 22,000 mark. It was ranging from 19,000 to 19,650 before the end of last autumn, but managed to gain double-digit percentages in a couple of months. This looks as a proof that market growth is not at all identical to economic growth forecasts. A need to avoid risks is a more notable motivator than economic comparison or the AI-driven optimism led by Nvidia. Yet, the recent sell-off in Nvidia, triggered by Chinese startup DeepSeek’s breakthrough, is a buying opportunity again, which is confirmed by a nearly 17% rebound from fresh dips.
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 |
|---|
