S&P 500 broad market index futures rose by 1.00% this week to 5,963
points, lifting the benchmark back above the key upside target at 5,940. This
recovery strengthens the case for further gains toward the 6,040 level and
reduces the likelihood of a deeper pullback into the 5,550–5,650 range. The
week has been filled with market-moving developments, including a highly
publicized dispute between U.S. President Donald Trump and entrepreneur Elon
Musk. Musk criticized Trump’s tax bill and claimed that Trump would not have
been elected without his support. Trump retaliated by threatening to revoke
government contracts tied to Musk’s companies, such as SpaceX and Starlink.
Musk escalated the conflict by referencing Trump’s name in the Jeffrey Epstein
case files and even called for Trump’s impeachment, though he later walked back
the threat. Trump labeled Musk “crazy.” The public feud triggered a brief 0.6%
drop in the S&P 500 to 5,930 points and a sharp 14.2% decline in Tesla
(TSLA) shares to $284.70. The incident resembled a calculated maneuver
reminiscent of a storyline from the television series Billions, in which a dramatic exit masks a strategic market
re-entry. Whether Musk and Trump had similar intentions remains unclear. During
the conflict, Musk warned that rising tariffs could lead to a U.S. recession in
the second half of the year. Despite the dramatic exchange, the S&P 500
quickly recovered Thursday’s losses, and a reconciliatory phone call between
Musk and Trump is expected to take place soon. Without the political spectacle,
the index may have advanced even further.
In another major development, President Trump
spoke with Chinese President Xi Jinping on Thursday. The call was described as
“good,” with Xi reportedly inviting Trump to visit China in a potential gesture
of reconciliation. Such diplomatic progress could provide additional fuel for
the S&P 500 to reach the 6,040 level. However, for gains beyond that point,
markets will likely require further positive developments in U.S.-China trade
relations or another strong catalyst. On the macroeconomic front, the picture
remains mixed. Investors are closely watching the upcoming May Nonfarm Payrolls
(NFP) report, scheduled for release on June 6. Wall Street forecasts a slowdown
in job growth from 177,000 to 126,000, while our projection is more
conservative at 75,000–100,000 new jobs. The ADP private payrolls data released
earlier this week was disappointing, showing only 37,000 new jobs, the lowest
since January 2022. Although the consensus anticipates the unemployment rate to
remain steady at 4.2%, any negative surprise could push it higher, as suggested
in the latest Federal Reserve minutes. Large investors appear to be cautious,
as reflected in SPDR S&P 500 ETF Trust (SPY) flows. Net outflows rose to
$1.01 billion this week, compared to $540 million last week. Market
participants hope that the Trump-Xi phone call will help stabilize sentiment
and reverse some of the outflows.
The
technical outlook for the S&P 500 has improved. The index remains within an
uptrend and has re-entered the critical range between 5,940 and 6,040. A
breakout above 6,040 could trigger a move toward the extreme upside zone of
6,300–6,400. However, failure to stabilize above 5,940 would likely lead to a
pullback toward support at 5,840–5,860.
Brent crude oil remains in a bearish technical phase, trading at $65.40 per
barrel after failing to break above resistance at $67.00–69.00. Immediate
support is located at $57.00–59.00, though over a multi-month horizon, there
remains a strong probability of a rebound toward $75.00–77.00.
Gold prices are currently testing resistance at $3,330–3,350 per ounce. A
failure to surpass this zone could result in a decline back toward
$3,230–3,250. At present, gold trades at $3,358, and downside risks remain
elevated. The baseline scenario continues to point to a move down to
$3,030–3,050.
The U.S. Dollar is weakening, with the EURUSD rising by 0.70% to 1.14250.
Early-week tensions between the U.S. and China and disappointing ADP job
figures provided support for the euro. The pair is now trading above its
primary upside target of 1.13500, increasing the likelihood of a break above
the November 2021 high at 1.15730. Whether the pair can sustain this momentum
will largely depend on Friday’s NFP report.