FX.co ★ Stock Market Outlook for February 25th: S&P 500 and NASDAQ Continue Their Sharp Decline

U.S. stock index futures closed the previous trading session with significant losses and have only slightly recovered during Asian trading, showing a modest correction. S&P 500 futures dropped by 0.8%, while NASDAQ futures lost nearly 1%. Asian equities also fell sharply as President Donald Trump's decision to impose tariffs on Canada and Mexico and restrict Chinese investments dampened risk appetite.

Stocks declined across the region, with the steepest drops observed in Japan, Taiwan, and Hong Kong. The yield on 10-year U.S. Treasury bonds fell by three basis points to 4.4% during Asian trading, following a surge in gold prices to a record high on Monday amid increased demand for safe-haven assets. Bitcoin, along with other risk-sensitive assets, also declined, testing key support levels.

Yesterday, Donald Trump confirmed that tariffs targeting Canada and Mexico will be implemented next month. Additionally, he directed a government committee to curb Chinese investments in technology, energy, and other strategic U.S. sectors.

These developments have created further uncertainty, making it difficult to predict the long-term consequences. However, the market's reaction speaks for itself. Whether these actions will fuel inflation and slow economic growth remains unclear. Trump has also deepened divisions between Washington and its allies over Ukraine, with his recent meeting with French President Emmanuel Macron reportedly ending in failure.

Regarding the ongoing trade war, Trump's administration continues to push for stricter semiconductor restrictions, which could pose a major challenge for Chinese tech companies and the stock market, especially after reaching a three-year high on optimism surrounding DeepSeek and President Xi Jinping's meeting with corporate leaders.

There are also reports that U.S. officials have met with their Japanese and Dutch counterparts to discuss limiting Tokyo Electron Ltd. and ASML Holding NV's ability to service semiconductor equipment in China.

Crude oil prices increased, as investors weighed a new wave of U.S. sanctions against Iran. Gold remained near record highs, while Bitcoin extended its decline for the third consecutive day. Many leading altcoins, including Ethereum, Solana, and Dogecoin, also faced selling pressure, as investors shifted toward alternative assets.

Technical Outlook for S&P 500

Demand remains weak. The key objective for buyers today is to break above the $6003 resistance level, which would allow the uptrend to continue and open the door for a move toward $6024. A further push to $6038 would solidify bullish control.

If risk appetite continues to decline, buyers will need to defend the $5986 support level. A failure to hold this area could result in a sharp pullback to $5967, with a potential drop to $5951 if selling pressure intensifies.