DailyPlay – Trade War Update – April 9, 2025

Trade War Update – April 9, 2025

The S&P 500, as represented by SPY, has broken below the $500 support level, confirming a bearish trend with significant momentum to the downside. The index’s rapid decline from the $570 resistance zone has exceeded our initial $540 target, and the technical setup now points to further downside towards $470 and $430, aligning with historical support levels from early 2023 and late 2022. The VIX spiking to 49% reflects heightened market fear and elevated options premiums, making it an opportune time to sell call verticals for bearish exposure.

Technical Breakdown: SPY’s break below $500 confirms a bearish trend, with updated downside targets of $470 and $430, levels that would wipe out the AI-led rally of the past two years, reflecting the severity of the current market correction.

Consumer Spending Slowdown: The Conference Board’s future expectations index, which fell to a 12-year low in March, continues to signal a significant slowdown in consumer spending. Depleted savings and rising debt levels, as highlighted by warnings from Delta, Nike, and Walmart, are exacerbating this trend.

Tariff Developments: On April 2, 2025, new tariffs were implemented, marking the most aggressive levies in over 100 years. These tariffs are expected to disrupt global trade, increase costs for businesses, and further dampen consumer spending, adding pressure on corporate earnings and economic growth.

U.S. Treasuries Concerns: Growing concerns about the risk-free nature of U.S. Treasuries have emerged as the aggressive tariff policies raise fears of inflationary pressures and potential fiscal strain. This uncertainty is eroding confidence in traditional safe-haven assets, contributing to broader market instability.

Economic Slowdown: The U.S. economy is expected to face a general slowdown as a result of these tariffs, which are likely to reduce global demand, disrupt supply chains, and increase costs. This environment threatens the earnings outlook for S&P 500 companies, particularly those reliant on consumer spending and international markets.