The S&P 500 is into a large range (between 2500 and 2750) on the daily chart. According to our technical and fundamental analysis, the S&P 500 might rise in the long term, even if it might fall in the next 3 weeks. The increase in equity market volatility preceded the escalation of trade tensions. Following the list of the specific Chinese goods that would be hit with US tariffs and the list of US goods China would target, the S&P 500 posted a reversal pattern in the middle of last week. Some analysts are keen to point out that there are not another $100 bln of US goods imports that China can put a tariff on to match the escalation. There are many other areas in which China can demonstrate its annoyance. Many analysts jump to their selling US Treasuries or depreciating the yuan.
This index managed to finish last week above its 200-day moving average, but it was still around a percentage point lower than when European markets closed. The cuts in the corporate tax schedule are expected to generally lower the effective tax rate as well.