S&P 500 Resilient Despite China Slowdown and Trade Tensions
China’s slowdown affects global supply chains and commodity demand, but the S&P 500 (SPX) has remained strong in 2025. The recent gains in the index are driven by AI-related tech stocks and resilient U.S. consumer spending. These gains have helped offset weakness in globally exposed sectors like retail and industrials.
While earnings growth is slowing, the market is looking past short-term risks tied to Chinese demand and Trump’s tariff threats.
However, sectors with deep China exposure, including semiconductors, autos, and materials, could face headwinds if global trade tensions escalate further.
The chart below shows that the S&P 500 pulled back last week on renewed U.S.-China trade tensions, but found support at the red dotted trendline. The broader trend remains bullish, supported by the emergence of an inverted head and shoulders pattern. Therefore, a break above 6,750 could push the index toward the 7,000 level.