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23.01.202513:01 Forex Analysis & Reviews: Stock Market: S&P 500 and NASDAQ Pull Back from Yearly Highs

Relevancia 03:00 2025-01-24 UTC--5

After reaching new yearly highs, U.S. stock indices have pulled back slightly. Futures on the S&P 500 lost about 0.1% and continue to trade in the red, while the tech-heavy NASDAQ is down 0.2%. The Dow Jones Industrial Average remains flat. Meanwhile, futures on the Euro Stoxx 50 dropped by 0.2%, while the MSCI Asia Pacific Index rose for the fourth consecutive session, marking its longest winning streak in nearly a month. Gains were driven by mainland Chinese stocks, with the CSI 300 Index rising as much as 1.8%.

Exchange Rates 23.01.2025 analysis

A briefing by China's securities regulator urging local insurers and mutual funds to increase their equity investments helped improve the gloomy sentiment among Chinese stock market investors. This came after earlier threats from U.S. President Donald Trump to impose tariffs, which negatively impacted market sentiment.

This highlights the Chinese authorities' willingness to provide substantial support to the market. However, any long-term impact will depend on the recovery of the domestic economy. Short-term measures may not lead to sustained success if fundamental challenges like slowing economic growth and concerns over global trade conflicts persist. Reviving consumer demand and investment in the manufacturing sector should remain a top priority for the Chinese government.

The yield on 10-year U.S. Treasury notes remained largely unchanged at around 4.60%, while the dollar consolidated within a narrow range against major currencies.

Markets are still digesting the implications of Trump's first few days in office, which have been softer than many economists and experts anticipated. This led the S&P 500 to approach historic highs. However, the three-day rally—partly fueled by Trump's initiatives to increase spending on artificial intelligence—appears to be fading. Earlier this week, the president announced a joint venture with SoftBank Group Corp., OpenAI, and Oracle Corp., which could invest billions of dollars into AI infrastructure.

Despite the market's positive reaction, long-term economic consequences of the new administration's decisions should not be overlooked. Many experts highlight that Trump's proposed tax and regulatory changes could significantly affect the U.S. business climate. Simplifying the tax code and lowering corporate taxes may spur investment but could also widen the budget deficit, raising concerns among analysts.

Foreign economic policy remains another critical area. Escalating trade tensions with other countries could trigger retaliatory measures and create turbulence in global markets.

Exchange Rates 23.01.2025 analysis

Demand for the S&P 500 has softened slightly, but the decline remains within the bounds of a correction. The main target for buyers today will be to defend the $6069 level. This would help maintain the uptrend and pave the way for a move toward $6079.

Another key priority for bulls is to secure control above $6092, which would further strengthen their position. In the event of a pullback due to waning risk appetite, buyers must defend $6069. A break below this level would likely push the index back to $6058, opening the door to further declines toward $6047.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Jakub Novak,
Analytical expert of InstaSpot
© 2007-2025
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