Insights 
VT 
Key Points
- S&P 500 slips to 6,012.55 as traders weigh soft CPI data and trade headlines
- Dollar hits lowest level since April 22 as safe-haven flows lift gold, yen, and euro
The S&P 500 struggled to hold momentum on Thursday, closing at 6,012.55 after reaching an intraday high of 6,074. While inflation data from the U.S. initially buoyed sentiment, the rally faded under pressure from resurgent global risks and growing scepticism over the U.S.-China trade truce. The index slipped 0.21% on the day, showing signs of fatigue after nearing its previous record highs earlier in the week.
Market focus sharpened on the consumer price index (CPI) report, which showed a slower-than-expected increase in U.S. inflation for May. While this initially reduced pressure on the Federal Reserve to tighten policy, traders remained cautious, recognising that upcoming producer price data and persistent tariff-related costs could fuel inflation again. The producer inflation report, due later in the day, will be closely watched for clues on the Fed’s preferred Personal Consumption Expenditure Index.
Traders are now pricing in a 70% chance of a quarter-point rate cut by September, even as Fed officials are expected to keep interest rates unchanged in their next meeting. Shane Oliver, chief economist at AMP Capital, warned that the price impact of tariffs could feed through either as higher inflation or lower profit margins. He argued that the Fed’s cautious stance is justified.
Trade developments added a layer of uncertainty. President Trump reaffirmed plans to issue letters to key trade partners within one to two weeks, outlining unilateral tariff conditions for negotiating new deals. While Trump praised the recent U.S.-China framework deal—which includes easing restrictions on rare earth exports and student access—markets remained unconvinced. Traders are holding back until more tangible terms are released.
Technical Analysis
The SP500 dipped from its 6074 high following a volatile session, eventually finding a temporary floor at 5997.55 before stabilising. Despite the initial rally, momentum faded through the European session as MACD flipped bearish and histogram bars turned red, indicating waning buying strength.
Picture: SP500 clings to 6000 after sharp pullback, as seen on the VT Markets app
Moving averages have begun to flatten, suggesting consolidation. A modest recovery attempt is underway as price holds just above the 6000 mark, but bullish conviction remains limited unless price reclaims the 6030–6050 zone. A break below 5995 could open the door to further downside pressure in the near term.
Volatility could spike in the coming sessions as markets digest producer price data, central bank commentary, and any additional rhetoric from the White House. Traders should watch for sharp sentiment shifts as the gap between market positioning and real-world geopolitical risks narrows.
