S&P 500 Bulls Regain the Driver’s Seat as Dips Get Bought, Resistance Breaks

• Strong tech earnings and fading tariff risks are helping stabilize investor sentiment this week.

• Weak macro data raises recession fears but boosts chances of early Fed rate cuts.

• S&P 500 futures rally as dip-buyers return, supported by bullish technical signals and easing bets.

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The S&P 500 rebounded strongly after being down about 2% at one point yesterday, closing higher, before index futures added more gains during Asian hours. Sentiment has taken a big boost from stronger-than-expected tech earnings and growing signs that the Trump administration is retreating from its most aggressive tariff threats.

As well as hopes for more constructive trade dialogue, we have also seen a noticeable rise in the probability of Fed rate cuts, thanks to weak data. After a weak GDP print and a flat core PCE index, today’s focus will be on ISM Manufacturing PMI, jobless claims and a few other macro indicators.

On the micro front, more tech earnings are on the way later, featuring Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN). Meanwhile, most of Europe was closed for a bank holiday.

Microsoft and Meta Beat Ahead of More Tech Earnings, Data

Futures on the S&P 500 advanced over 1.2%, led by gains in Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META), both of which impressed with upbeat sales figures. Microsoft topped revenue forecasts, while Meta also beat analysts’ expectations.

So far, the earnings season—particularly among the tech heavyweights—has delivered just what markets needed: reassurance. That, in turn, is providing a solid underpinning to equity futures.

All eyes now turn to Apple and Amazon’s earnings after the close.

Beyond the corporate figures, however, there remains the bigger question: have we heard the loudest tariff rhetoric already?

Trade Deal Optimism Keeping Risk Appetite Strong

Optimism is being fuelled by speculation that upcoming deals between the US and key partners could mitigate some of the damage from President Trump’s ongoing trade war. Traders also firmed up expectations for Fed easing later this year, especially after the economy posted its first contraction since 2022.

The White House, for its part, said an initial set of trade agreements is close, which would scale back some of the threatened tariffs. Reports also suggest Washington is stepping up backchannel communications with Beijing. Still, Trump has made clear he won’t be rushed into deals just to calm jittery investors.

Recession Risks Rising, But Fed May Cut Rates Sooner

Yesterday fears of stagflation—where slow growth meets high inflation—came roaring back into focus. Several companies even withdrew their earnings guidance amid tariff concerns. However, a glimmer of hope arrived later in the day. A softer-than-expected Core PCE reading—often called the Fed’s favourite inflation gauge—combined with stronger-than-expected data on pending home sales, personal income, and spending, helped lift market sentiment.

All eyes now turn to the ISM manufacturing PMI later on, while the April nonfarm payrolls (NFP) report will be released on Friday.

This week’s mostly weak macroeconomic signals sharply raised recession expectations. While that sounds ominous, it paradoxically improves the appeal of the S&P 500, as it increases the likelihood of earlier Federal Reserve rate cuts—something markets typically embrace.

Pressure from President Trump on the Fed to act may also accelerate monetary easing. Simultaneously, the negative economic optics could push the administration to reduce tariff pressure, further bolstering risk assets.

S&P 500 Technical Analysis: Key Levels to Watch

From a technical perspective, the S&P 500 outlook continues to improve with bullish-looking price action, although much of the buying pressure may have already happened. A period of consolidation and pullback should not come as a surprise now. But essentially, the bulls are in the driving seat again, so dip-buying will remain the default setting for most traders.

On the S&P 500 futures, we can see that the index has now broken more resistance levels, including 5532 and 5600. These levels were previously support and resistance. My expectation is that the bulls will step in around these levels on any short-term dip. Only a close below yesterday’s low at 5455 would invalidate this bullish view.

What are the next resistance levels to watch? Well, the first one is at 5656, marking the 61.8% Fibonacci retracement against February’s high. Above that, the area between 5721 and 5776 will come into focus next. This zone marks the point of origin of the post-election rally. Could we see some resistance there?

Anyway, for now, the path of least resistance is to the upside. The index has also held the retest of a broken bearish trendline from February, which is another positive sign.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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