S&P 500 and Nasdaq 100 ETFs Face Market Pressure Amid Tariff Concerns

The exchange-traded funds (ETFs) that track the S&P 500 index have declined once again. Meanwhile, the Nasdaq 100 ETF remains below its 200-day average as President Donald Trump continues to announce new tariffs, creating significant market headlines.

Current Market Overview

What Happened: Recent technical analysis of the SPDR S&P 500 ETF Trust SPY and the Invesco QQQ Trust, Series 1 QQQ indicates that both funds are trading below their long-term averages amidst ongoing market volatility.

SPDR S&P 500 ETF Trust (SPY)

Benzinga Pro data shows that as of Wednesday’s market close, SPY’s price stayed below its 20, 50, and 200-day simple moving averages. After slipping below the long-term average on March 10, SPY faced pressures for 10 trading days. A brief recovery allowed it to trade above this level on Monday and Tuesday of this week, but it fell again on Wednesday.

Its relative strength index (RSI) sat at a neutral 44.86, indicating balanced buying and selling activity. The MACD line, however, was negative at -6.37; still, it approached the signal line with a histogram reading of 1.78, suggesting a potential bullish signal within a generally bearish trend.

Invesco QQQ Trust (QQQ)

Similarly, QQQ’s price was below its 20, 50, and 200-day simple moving averages as of Wednesday’s close. It has remained under its long-term average since March 5. After briefly approaching the 200-day average on March 25, QQQ has since fallen further, marking 16 consecutive trading sessions below the long-term average.

Its current RSI stands at 44.28, which is also neutral. The MACD indicator for QQQ is negative at -7.58, yet the histogram shows a positive value of 2.13, indicating a potential bullish sign emerging within an ongoing bearish trend.

Impact of Tariffs on the Market

Why It Matters: Trump recently announced a 25% tariff on auto imports, while hinting that some countries may be exempted from these new “reciprocal tariffs” set to take effect on April 2nd. Trump remarked, “This will continue to spur growth.”

While tariffs are expected to introduce certain economic challenges, Scott Wren, senior global market strategist at Wells Fargo, suggests that their adverse effects can be lessened through proactive actions from both companies and consumers. He stated, “Let’s be clear: We expect tariffs to have some economic cost.”

Wren pointed out that many U.S. companies have begun adjusting prices in anticipation of the tariffs, typically charging less than the full tariff rate due to high profit margins, which allow for some price absorption.

Mitigation strategies are already in play. “Many companies have diversified their supply chains since the early pandemic or even prior to that,” he noted. Consumers are also adapting by exploring alternatives, such as domestic products, should imports rise in price. Wren believes these adjustments will lessen the overall impact of the tariffs.

Price Action Update

Price Action: As of Wednesday, SPY decreased by 1.19%, closing at $568.59, while QQQ fell by 1.84% to $484.38, according to Benzinga Pro data. On Thursday morning, futures for the Dow Jones rose by 0.27%, while the S&P 500 and Nasdaq 100 saw advances of 0.21% and 0.06% respectively.

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