S&P 500 Index Prices Await President Trump’s Next Move

Powell’s Future as Fed Chair in doubt

Speculation has resurfaced over whether Federal Reserve Chairman Jerome Powell will remain in office until the end of his term in May next year. Reports suggest that President Trump is considering removing Powell and has informally consulted members of Congress on the matter. However, shortly after the reports emerged, Trump stated that he does not intend to remove Powell “at this time,” appearing to test the market’s reaction to such a move.

For decades, Federal Reserve officials have operated with independence, enabling them to shape U.S. monetary policy free from political influence. Any disruption to this autonomy could undermine investor confidence and negatively affect financial markets.

President Trump has further suggested that Powell is under investigation for allegedly misusing public funds during the Fed headquarters renovation, asserting that the project’s costs overran its budget. However, the president’s real grievance lies in Powell’s reluctance to cut interest rates. Trump contends that inflation is sufficiently low to justify rate reductions, whereas Powell maintains that recent tariff-driven price pressures warrant keeping rates on hold.

It is important to note that U.S. federal law only allows the removal of a Federal Reserve Chair for cause, meaning any dismissal would likely spark a legal battle, potentially escalating to the Supreme Court. Although the Court has affirmed presidential authority to dismiss employees of some federal agencies, it has explicitly excluded Federal Reserve officials from this provision.

More Tariffs on the Horizon

President Trump announced plans to impose new tariffs ranging from 10% to 15% on goods from over 150 countries. Letters have already been sent to various governments indicating that these tariffs would take effect in early August unless new trade agreements are reached before the month’s end. Trump emphasized that his administration does not intend to prolong negotiations indefinitely.

Despite tensions, Trump signaled that a trade agreement with the European Union could still be reached before the deadline, even after notifying the bloc of forthcoming 30% tariffs.

S&P 500 Price Pulls back After Record High

The S&P 500 index reached a record high in mid-July, rebounding from the 6,300 level before retreating on profit-taking. Currently, the index is moving within a bullish rectangle pattern. A breakout above the upper boundary of this pattern, located at 6,285, would signal renewed upward momentum and could drive prices toward the 6,400 level. In this scenario, the psychological resistance level at 6,350 should be considered.

Key levels to watch in a Bearish Scenario

Conversely, a break below the lower boundary of the rectangle at 6,200 would suggest weakening bullish momentum and could trigger a wave of selling pressure, pushing the index toward 6,128. A daily close below this level would indicate the potential for a deeper correction possibly towards the 6,000- mark. In this scenario, the 50-day moving average should be kept in focus.

S&P500 – Daily Price Chart

Chart Source: ADSS Platform