The S&P 500, represented by the US500 contract, has partially recovered from its recent sell-off following a lower-than-expected CPI inflation reading for February. However, the US stock market benchmark is currently trading below two standard deviations from its 100-day moving average, and ongoing political uncertainties continue to weigh on investor sentiment. While the softer-than-expected inflation print provided temporary relief, futures contracts are now pointing to further losses, reflecting continued concerns over economic growth.
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Source: xStation5
Uncertain Outlook for Wall Street
Recent comments from President Donald Trump, suggesting that economic growth might have to be sacrificed to achieve his policy goals, have fueled investor fears of stagflation in the U.S. economy. In light of these uncertainties, Goldman Sachs has downgraded its already conservative outlook for Wall Street, lowering its target for the S&P 500 from 6500 to 6200 on higher tariff rates. If this scenario materializes, it would mark the end of the index’s streak of double-digit annual gains.
Challenges on the Horizon
S&P 500 futures are currently down 0.6% as investors react to potential internal political turmoil in the U.S. Senate. Democratic leader Chuck Schumer has announced plans to block a Republican spending bill aimed at preventing a government shutdown, urging the GOP to support an alternative Democratic proposal that extends funding until April 11. Additionally, market optimism from yesterday’s softer CPI data could be overshadowed by today’s release of the Producer Price Index (PPI) inflation data, which may influence the Federal Reserve’s monetary policy decisions. Despite these risks, Fed Chair Jerome Powell has reiterated confidence in the underlying stability of the U.S. economy, citing controlled inflation and a balanced labor market.
