Week Ahead: Can US500 index hold on to post-election gains?

​

•   US500 now merely 1.4% higher since November US elections
   
• US500 dragged down by poor US data, tariff threats, subdued Nvidia earnings
   
• Coming up: Trump speech, tariff deadline, NFP report, Powell speech could dictate US500’s fortunes
   
• Key levels: 6,000 to the upside; 200-day SMA to the downside; technical rebound possible
   
• Wall Street’s 12-month S&P 500 target price: 6874 – about 17% higher from current levels

A lot can happen in just one week in global financial markets.

(which is why you must regularly stay up to date with our Market Analysis)

Just last week, on February 19th, the US500 index posted an all-time intraday high of 6151.3.

Since then, it has tumbled about 4.4%, and completely wiped out all of the gains it had built up so far in 2025.

NOTE: FXTM’s US500 index tracks the S&P 500 - the benchmark index measuring the overall performance of the US stock market.

​

Why have US stocks fallen?

Two words: risk aversion.

Risk aversion simply means that investors and traders are selling off riskier assets, such as US stocks and cryptos, as they grow fearful about future risks.

QUICK RECAP: Here are 3 key events that fuelled the recent bout of risk aversion:

1) Feb 21st: US stocks finally took heed of worsening economic data.

​​Recall last Friday, the US services purchasing managers index (PMI) came in at 49.7.

When the PMI number comes in below 50, it means a contraction for that sector.

Note also that the services sector is a bigger driver of the world’s largest economy, as opposed to manufacturing.

Hence, that surprise worsening in the US services sector triggered a 1.7% drop on February 21st - the S&P 500’s biggest one-day drop so far in 2025.

2) President Trump’s tariffs threats

Also, recent days have seen President Donald Trump continue banging on his trade war drums.

Markets fear that heightened trade tariffs, if imposed against China, the EU, Canada, and Mexico, could actually hurt the US economy more.

In short, markets sold off from riskier assets first, not sticking around to to find out the full extent of the economic impact, or even if the tariffs would actually be imposed.

3) Feb 26th: Nvidia’s not-spectacular earnings

Nvidia is the second biggest of the 500 or so companies contained within the S&P 500 stock index (Apple is the largest).

To be certain, after US markets closed last Wednesday, Nvidia still announced better-than-expected sales and profits for the 3 months ending January 26th, 2025.

The AI champion also was bullish about its earnings for this ongoing quarter (3 months through April 30th).

However, that wasn’t enough to satiate the appetites of investors who had been spoiled by blockbuster earnings in recent years.

Hence, Nvidia’s stocks fell 8.5% when US markets reopened yesterday (Thursday, Feb 27th) – its biggest one-day drop since January 27th – at the height of the DeepSeek-inspired rout.

And given Nvidia's size and influence on the US500, the former's steep drop in turn also dragged the latter lower.

With all the above-listed “scars” still fresh in recent memory, investors and traders will be pondering …

Is the US500 susceptible to even more declines in the new month?

Key Events: March 3-7

US stock markets will have plenty to contend with over the coming week:

Monday, March 3

• AUD: February Melbourne Institute Inflation
• CN50 index: China February manufacturing PMI
• GER40 index: Eurozone February CPI
• Global February PMIs (final)
• US30 index: US February ISM manufacturing; speech by St. Louis Fed President Alberto Musalem

Tuesday, March 4

• JPY: Japan January jobless rate
• AU200 index: RBA meeting minutes; January retail sales
• EU50 index: Eurozone January unemployment
• US500 index: President Trump’s speech before Congress
• US tariffs set to be imposed on China, Canada, Mexico

Wednesday, March 5

• AUD: Australia 4Q GDP
• CNH: China February services, composite PMIs
• CHINAH index: China 2025 growth target report
• SG20 index: Singapore February PMI; January retail sales
• RUS2000 index: Fed Beige Book; US February ISM services index; January factory orders

Thursday, March 6

• AUD: Australia January trade balance
• EUR: ECB rate decision; Eurozone January retail sales
• RUS2000 index: US initial weekly jobless claims; 4Q GDP (second est.)
• USDInd: Speeches by Fed Governor Christopher Waller, Atlanta Fed President Raphael Bostic

Friday, March 7

• CNH: China February trade balance
• TWN index: Taiwan February trade balance, CPI
• GER40 index: Germany January factory orders; Eurozone 4Q GDP, employment (final)
• US500 index: US February nonfarm payrolls
• USDInd: Speeches by Fed Chair Jerome Powell, New York Fed President John Williams, Fed Governor Michelle Bowman
• CAD: Canada February employment

Here, we highlight specific events that could trigger massive reactions in the US500 index:

• Tuesday, March 4th: President Trump’s speech before Congress; and fresh US tariffs?

As mentioned earlier, more trade war rhetoric out of POTUS, coupled with the actual imposition of trade tariffs, could trigger another leg down for riskier assets, including the US500 index.

• Friday, March 7th: US jobs report; speech by Fed Chair Jerome Powell

The monthly nonfarm payrolls (NFP) report is a major event for global financial markets, as US consumers are the main growth driver of the world’s largest economy.

The more jobs that Americans have, the more money they have to spend and keep growing the US economy.

Here’s what economists are forecasting for the upcoming February NFP report:

• Headline NFP number: 158,000 new jobs added last month
  (if so, that would be higher than January’s 143,000 headline NFP number)
   
• Unemployment rate: 4%
  (if so, that would be match than January’s 4.0% figure – the lowest since May 2024)
   
• Average hourly earnings growth (month-on-month): 0.3% higher than January 2025
  (if so, that would be lower than January’s 0.5% month-on-month figure - Jan 2025 vs. Dec 2024)
   
• Average hourly earnings growth (year-on-year): 4.2% higher than February 2024
  (if so, that would be higher than January’s 4.1% year-on-year figure - Jan 2025 vs. Jan 2024)

After the NFP's release, Fed Chair Jerome Powell is due to make a speech.

If a weaker-than-expected US jobs report prompts the Fed Chair to hint at a sooner-than-later US rate cut, that could help the US500 rebound.

 

POTENTIAL SCENARIOS:

• The US500 could tumble towards its 200-day simple moving average (SMA), if Trump’s speech and tariffs trigger more risk aversion, along with an unexpected weakness in the US jobs market.
  
  However, further signs of economic weakness may also prompt the Federal Reserve – the US central bank – to move forward its next rate cut to May 2025.

• The US500 could stage a recovery back towards the 6,000 mark, if Trump’s speech doesn’t produce any negative shockers, and if more trade tariffs are delayed yet again.
  
  A “goldilocks” US jobs print (resilient hiring and subdued wage growth) could help risk sentiment recover too, although potentially forcing the Fed to delay its intended rate cuts further out into the year.

From a technical perspective …

Referring to the chart above, recent declines have pushed the US500 index’s 14-day relative strength index (RSI) to its lowest levels since early-August 2024.

If the RSI falls below the 30 line, which is the textbook threshold for “oversold” conditions, that could prompt a technical rebound.

Note that, the last time the 14-day RSI were at these low-30 levels, the S&P 500 duly rebounded.

The US500 then went on to climb as much as 20% (using intraday prices) over the next 6 months to reach its latest record high (6151.3 intraday high on February 29th, 2025).

Of course, the fundamental backdrop is very much different this time around, with the prospects of a global trade war looming.

It would require a meaningful dilution of market fears before US stock indexes can stage a sustained recovery.

Over the longer-term …

Wall Street analysts and experts still predict that the S&P 500 would hit 6874 – which would be about 17% higher than current levels – by February 2026.

But as we said at the very top of this article, a week is a long time in markets, what more 12 months out.

Still, the days ahead may yet produce massive trading opportunities to be taken advantage of, provided market participants remain alert and can react fast.

​