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04.03.2025 09:29 AM
Will the U.S. Stock Market Continue to Decline? (Potential Drop in #SPX and #NDX)

The U.S. economy is losing growth momentum, which raises concerns for investors in American financial assets amid uncertainty due to a trade war initiated by Donald Trump against U.S. trading partners.

Data from the Institute for Supply Management (ISM) on Monday showed that the Manufacturing PMI fell to 50.3 in the past month from 50.9 in January, below the expected 50.5. The index indicates slower growth in the manufacturing sector due to declining demand, production stabilization, and job cuts. Companies show signs of an initial operational shock from the new administration's tariff policies. Rising prices due to Trump's trade policies have already caused delays in placing new orders, disruptions in supplier deliveries, and an impact on production resources.

New orders have dropped significantly since March 2022, falling to 48.6 from 55.1. Employment has also declined to 47.6 from 50.3, nearing the contraction threshold of 50. The report also points to a sharp slowdown in production, dropping to 50.7 from 52.5 in the previous month. Additionally, price pressures have surged to their highest level since June 2022, rising to 62.4 from 54.9. A similar trend is observed in other manufacturing inventory indicators.

With Canada and Mexico expected to join the trade war against the U.S. today, a 25% tariff on imports from these countries is anticipated. Coupled with signs of a slowing national economy, the U.S. stock market continues its freefall after a brief rebound late last week. This is further exacerbated by China's decision to impose retaliatory tariffs of up to 15% on certain U.S. goods starting March 10. The release of pessimistic economic data, concerns over import tariffs, and geopolitical tensions between Washington and Ukraine have already impacted U.S. stock indices, which fell between 1.5% and 2.5% on Monday.

Crude oil prices for BRENT and WTI remain in a short-term downtrend, experiencing their steepest decline since mid-January. A key factor in this drop was the announcement that OPEC+ will continue its planned production increase in April. This raised fears of rising global supply, which will likely put downward pressure on oil prices. Additionally, the prospect of new U.S. tariffs on imports from Canada and Mexico could slow economic growth and reduce oil demand.

The cryptocurrency market experienced a brief rebound over the weekend, sparked by statements from Trump on Truth Social. He claimed that a U.S. crypto reserve would "elevate this critical industry" and reverse the restrictive policies of the previous administration. However, the market crashed on Monday and continues to decline this morning, erasing all previous gains.

Looking at the broader picture, it is clear that Trump's administration is dismantling the geopolitical and economic frameworks established by the Democrats. However, it has yet to produce any tangible positive results—something that would be challenging to achieve in just a month and a half of his presidency.

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Market Forecast for the Day

#SPX

The S&P 500 CFD contract remains under pressure but is still within the 5807.00–6124.80 range. If the decision to impose higher tariffs on Canadian and Mexican goods is confirmed today, and if Trump signals that this is only the beginning, we could see a breakdown of the lower boundary of this range, leading to a drop to 5700.00.

#NDX

The NASDAQ 100 CFD contract is also under pressure, trading near its support level of 20,500. The technology sector feels the strain from China's retaliatory tariffs, which could significantly impact U.S. tech companies. A further deterioration in the situation could push the contract down to 19,863.00.

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