empty
20.03.2025 10:05 AM
Fed's message music to bulls' ears

The Fed is not throwing a lifeline to the S&P 500, but does it need one? Lifelines are for those drowning, while the market is merely spooked by a fleeting recession scare. Powell's tone at the post-FOMC press conference was bot just conciliatory—it was calming. The head of the Fed signaled control, and that was enough to lift the broad stock index.

Recession risks may be higher, but they are not alarmingly so. Inflation remains sticky, but there is no reason to panic. The impact of tariffs is transitory. The White House's protectionist stance brings uncertainty, but the Fed has time to wait. The stock market, which had lost about $5 trillion in market capitalization, was desperate for good news. Powell's calm gave traders the confidence to add long positions in the S&P 500 index.

The broad stock index logged its strongest post-FOMC reaction since July, as policymakers' reluctance to radically adjust the federal funds rate forecast was exactly what markets wanted to hear. Investors stopped fretting over recession risks—and what more could a battered S&P 500 ask for?

S&P 500's response to Fed meetings: patterns and trends

This image is no longer relevant

The Fed slightly raised its inflation forecast from 2.5% to 2.7%, while lowering its GDP growth projection for 2025 from 2.1% to 1.7%. In effect, this reduced the chances of a soft landing and edged the economy closer to stagflation—an environment that equity markets do not favor.

According to Bloomberg estimates, the probability of a soft landing has shrunk to 10%, while the likelihood of stagflation has climbed to 40%. The chance of a recession now stands at 35%, while the risk of a hard downturn is estimated at 15%. This means that the odds of an unfavorable scenario for the S&P 500 are hovering around 90%, hardly an environment conducive to a sustained rally.

The Devil is in the details. While the Fed's median rate projection remained unchanged—still pointing to two rate cuts—the details tell a different story. In December, 15 Fed officials backed this outlook. By March, that number had dropped to 11. Meanwhile, eight Fed policymakers now expect only one rate cut or even less in 2025. That is bad news for the S&P 500.

Fed's interest rate projections

This image is no longer relevant

This image is no longer relevant

Adding to market jitters, Donald Trump's call for the Fed to accelerate rate cuts—declaring April 2 as "America's Liberation Day"—only fuels uncertainty. The White House's tariffs are just around the corner, and there is reason to believe they will be substantial. As that moment approaches, fear will creep back into the markets, bringing with it another wave of S&P 500 sell-offs.

From a technical standpoint, the daily chart shows that S&P 500 bulls have launched a counterattack, attempting to regain control. However, the bearish momentum remains dominant. A pullback from the resistance levels of 5,750 and 5,815, or a break below the pivot level of 5,670 and the fair value of 5,620 should be seen as selling opportunities.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
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

The ECB May Cut Interest Rates Twice

The euro is showing a sharp rally against the U.S. dollar. The EUR/USD pair has already reached a three-year high and shows no signs of slowing down. Meanwhile, according

Jakub Novak 12:42 2025-04-11 UTC+2

AUD/USD. Analysis and Forecast

The AUD/USD pair is attempting to attract buyers in its rebound from the psychological level of 0.5900, marking its lowest point since March 2020. The upward momentum has managed

Irina Yanina 12:39 2025-04-11 UTC+2

Markets Face a Prolonged Period of Instability (USD/JPY and USD/CHF Likely to Continue Falling)

On Thursday, investors realized there is currently no such thing as stability. High market volatility remains and will continue to dominate for some time. The ongoing cause of this remains

Pati Gani 09:11 2025-04-11 UTC+2

The Market Has Grown Used to Chaos

What is life if not a game? In past years, investors focused on the standoff between the Federal Reserve and financial markets. But in 2025, the rules of the game

Marek Petkovich 08:42 2025-04-11 UTC+2

What to Pay Attention to on April 11? A Breakdown of Fundamental Events for Beginners

A relatively large number of macroeconomic events are scheduled for Friday, but none are expected to impact the market. Of course, we may see short-term reactions to individual reports

Paolo Greco 06:04 2025-04-11 UTC+2

GBP/USD Overview. April 11: The Market Didn't Believe Trump

The GBP/USD currency pair also traded higher on Thursday. As a reminder, macroeconomic and traditional fundamental factors currently have little to no influence on currency movements. The only thing that

Paolo Greco 03:28 2025-04-11 UTC+2

EUR/USD Overview. April 11: The American Comedy Continues

The EUR/USD currency pair declined sharply overnight on Wednesday but showed some recovery during the day. On Thursday, there was further growth—this series of fluctuations can only be described

Paolo Greco 03:28 2025-04-11 UTC+2

Trading Recommendations and Analysis for GBP/USD on April 11: The Dollar Takes a Double Hit

The GBP/USD currency pair also showed strong growth on Thursday, although not as strong as the EUR/USD pair. The pound gained only around 200 pips—which isn't a considerable move under

Paolo Greco 03:28 2025-04-11 UTC+2

EUR/USD. A Message from the Past: U.S. CPI Report Fails to Support the Dollar

The CPI report released on Thursday showed weaker-than-expected inflation. The market responded accordingly: the U.S. dollar came under renewed pressure (the U.S. Dollar Index fell into the 100.00 range)

Irina Manzenko 00:47 2025-04-11 UTC+2

The Euro Charges Ahead. Opponents Retreat

A rally in European stock indices, slowing U.S. inflation, and the fact that the average U.S. tariff has not changed significantly despite the 90-day deferral all contributed to the rise

Marek Petkovich 00:47 2025-04-11 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.