FxWirePro: S&P 500 suffers steepest lost since October; bullish outlook intact

The US benchmark stock index, S&P 500 has suffered its steepest loss since October yesterday as the financial markets brace for uncertainties with regard to policies of the United States under Trump administration. However, the stock market is still up more than 9 percent since the election of Donald Trump. Investors are bracing the idea that tax reforms proposed by the Trump team during the campaign could take some time to shape as the administration fights to deliver a health care plan. In addition to that, the recent comments from the U.S. treasury secretary Steven Mnuchin at the G20 finance ministers’ summit in Germany indicate that there would be significant changes ahead in terms of trade policies, which just adds to the uncertainties, no matter how good they might turn out in the future.

The S&P 500 is currently trading at 2340 and we expect that there could be further downside. It has been declining since it reached as high as 2400 in early March. We expect the bulls to reemerge once the correction reaches around 2280. We stand by our previous mentioned target of 2500 (approx.). We expect the actual tax stance of the government would become clearer in H2.