Over the past week, SPY (S&P 500 ETF) has seen increased volatility, driven by a mix of trade tensions, inflation concerns, and Federal Reserve speculation. After briefly entering correction territory—down more than 10% from its February highs—SPY managed to stage a strong recovery, closing at $562.81 on March 15, 2025. This 2.07% daily gain suggests that investors are buying the dip, but questions remain about whether the market has truly found a bottom.
The biggest factor influencing sentiment right now is trade policy uncertainty. President Trump’s 200% tariff on European alcohol products has intensified global trade disputes, causing ripple effects in financial markets. Additionally, analysts are split—Oppenheimer maintains an S&P 500 target of 7,100, while Goldman Sachs has cut its forecast, citing slower growth and potential stagflation. With major tech stocks still under pressure, investors are watching closely to see if this rally has legs.
Another key catalyst is the upcoming Federal Reserve (FOMC) meeting on March 20. Traders are speculating whether the Fed will signal a rate cut by June, which could provide support for equities. However, if policymakers take a hawkish stance, emphasizing inflation control over economic growth, SPY could struggle to hold onto recent gains. The CPI report this week showed easing inflation, but the Fed’s response remains uncertain.
For now, market sentiment is cautiously bearish, with traders reacting to both macro risks and technical levels. If SPY can break and hold above $565, it may signal further upside, while a rejection near resistance could lead to another leg lower. The next few trading sessions will be critical in determining whether this rebound is the start of a new uptrend or simply a temporary relief rally before another downturn.
