The S&P 500 index slipped on Thursday, with the index now trading below its 125-day moving average (MA). The stock market’s rough end to last week sparked concerns amongst Wall Street experts on top stocks and the major US indexes. That slip has continued into this week, with the S&P 500 index now down 1.4% this week.
The US stock market is mostly in the red in the past week as tariff fears linger from the Trump administration, as well as the ongoing Government shutdown. U.S.-China trade frictions were again in the spotlight after Trump confirmed on Wednesday that tensions with China remain elevated. The prospect of a trade war has injected uncertainty into global markets, sending tech and chip stocks lower and weighing on investors’ outlook. Furthermore, the government shutdown is now into day 16, with no end seemingly in sight yet.
As a result, attention has slightly shifted from stock investments to alternatives like cryptocurrency and precious metals. The price of Silver and Gold is surging, while crypto assets have performed well in the last 30 days. As for Bitcoin, despite dipping this week, the coin has hit a new ATH this month of $124,000. At press time, the king crypto sits at a valuation of $108,000, down 10% this week.
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Fortunately, most Wall Street strategists say stocks have more room to run, with strong corporate earnings and Federal Reserve rate cuts supporting the rally. While stocks have dipped lower because of recent trade concerns, some investors are also buying the dip, helping buoy the market. “We remain cautiously optimistic that (the US and China) will ultimately pursue a negotiated resolution,” said Hoffmann-Burchardi.
On the other hand, Morgan Stanley analysts believe the market’s next move is likely to test just how sturdy the bull market is currently. Led by analyst Mike Wilson, the bank warns that the S&P 500 may face a deeper correction if tensions between the U.S. and China don’t de-escalate soon. Following last week’s additional 100% US tariff on China, stocks like Apple and Nvidia with close ties to both countries sank in value. Both of those stocks are key staples of the S&P 500 index, and lay out a path for smaller stocks in the index to follow.