empty
16.07.2025 09:51 AM
The Market Failed to Hold Its Peak

Markets have started selling the news. Combined with the impact of tariffs showing up in U.S. inflation data, this prevented the S&P 500 from holding at its record high. The broad stock index reached the 6,300 mark for the first time in history, but failed to maintain its position at the top. Another trade deal by Donald Trump — this time with Indonesia — was unable to inspire the bulls in U.S. equities to push further.

Even positive corporate earnings couldn't stop the sell-off in banking stocks. Previously, the KBW Bank Index had been outperforming the S&P 500. Investors were buying on rumors. Then came the sell-off on the facts.

Performance of the Bank Index

This image is no longer relevant

Interestingly, the S&P 500's surprise factor — the percentage of companies beating forecasts — has consistently been 75% over the past several quarters. Tech giants frequently exceed Wall Street's expectations, yet still often fall immediately after their earnings reports are released.

For example, Microsoft beat forecasts in 11 previous instances, but in 7 of them, its shares declined. Alphabet had a winning streak of 9 quarters, closing in the red on 5 of those earnings days. NVIDIA has consistently outperformed estimates since the launch of ChatGPT in late 2022, yet its stock still fell in three of those instances.

Investors are now selling the rumors and lowering their estimates. As of July 2024, earnings per share (EPS) for Q2 2025 were expected to increase by 14.7%. By the end of last year, this figure dropped to 11.7%. Now it's down to just 4.8%.

EPS Forecast Dynamics for S&P 500 Companies

This image is no longer relevant

Wall Street's behavior is understandable. Uncertainty surrounding U.S. tariffs remains extremely high. This explains the frequent revisions to forecasts for the broad stock index. In December, the consensus forecast stood at 6614 — a 13% increase projected for year-end 2025. By May, the forecast was lowered by nine percentage points — the fastest revision pace since the pandemic. In June, analysts returned to the bull camp.

This image is no longer relevant

The S&P 500's reluctance to rise on positive trade deal news, combined with investors' tendency to sell the news, increases the risk of a correction in the broad index. Especially since, following the release of U.S. inflation data for June, derivatives reduced the likelihood of a renewed Fed easing cycle in September, from 63% to 54%. Interest rates are expected to remain high, no matter how strongly Donald Trump calls for cuts. That's bad news for stocks.

From a technical perspective, the daily S&P 500 chart suggests the principle: if the market doesn't go where it was expected to, it's more likely to move in the opposite direction. The bulls' failure to hold above 6300 is a sign of weakness. A decline below fair value indicates the initiative is shifting to the bears. A breakout below the pivot level at 6225 would justify locking in profits on long positions and moving to short-selling.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Igor Kovalyov
Start trade
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

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is attempting to attract buyers. Despite the European Central Bank's decision on Thursday to leave interest rates unchanged, the euro is facing headwinds due to ongoing

Irina Yanina 13:20 2025-07-25 UTC+2

No Unity of Opinion Within the ECB Yet

Yesterday, the European Central Bank kept interest rates unchanged, citing risks stemming from the trade war with the U.S., the strong euro, and rising government spending. According to Governing Council

Jakub Novak 11:59 2025-07-25 UTC+2

ECB Leaves Rates Unchanged

Yesterday, many were watching how the European Central Bank would act under current conditions, as the economy still requires stimulus, but inflationary risks prevent further easing. Following the meeting, President

Jakub Novak 11:36 2025-07-25 UTC+2

The Market Has Chosen a Win-Win Strategy

The U.S. stock market has shaken off its fears completely. The VIX volatility index has plunged to its lowest level since early February, while the S&P

Marek Petkovich 11:15 2025-07-25 UTC+2

Will Trump Succeed in Forcing Powell to Do His Bidding? (Potential for a Bitcoin Decline and a Rise in #NDX)

The U.S. president is fully implementing his aggressive policy toward everyone and everything — both in foreign and domestic affairs. While his actions toward trade partners are more or less

Pati Gani 09:57 2025-07-25 UTC+2

What to Pay Attention to on July 25? A Breakdown of Fundamental Events for Beginners

There are relatively few macroeconomic reports scheduled for Friday, but all of them are quite important. In Germany, the IFO Business Climate Index will be released — the least significant

Paolo Greco 06:43 2025-07-25 UTC+2

GBP/USD Overview – July 25: No Sign of De-escalation Yet

On Thursday, the GBP/USD currency pair pulled back slightly, but this strengthening of the dollar has no real impact on the overall picture. The British pound has corrected in recent

Paolo Greco 04:17 2025-07-25 UTC+2

EUR/USD Overview – July 25: The ECB Meeting Did Not Change the Balance of Power Between the Dollar and the Euro

The EUR/USD currency pair continued to move upward on Thursday. There were several macroeconomic events scheduled for the day, and they did provoke a small market reaction

Paolo Greco 04:17 2025-07-25 UTC+2

EUR/USD: ECB's "Hawkish Pause" and Conflicting Macroeconomic Reports

The results of the ECB July meeting provided slight support for the euro. However, contradictory macroeconomic reports and anticipation of the outcome of the US-EU negotiations played a restraining role

Irina Manzenko 00:50 2025-07-25 UTC+2

The Euro Outsmarted the "Bears"

There was no "sell the fact" reaction. One of the reasons behind the recent EUR/USD rally was the expectation that the deposit rate would be held at 2% following

Marek Petkovich 00:50 2025-07-25 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.