by Ivan Martchev
May 28, 2025
How much is one point of the S&P 500 Index worth?
Most people who do not work in the field of finance would have trouble answering that question, and quite a few in the field would also have some trouble knowing the figure off the top of their heads.
I had a rough idea – as I know what the total market capitalization of the index is – but I asked Grok for a more precise answer and after the chatbot asked me a few follow-up questions, it gave me the calculation: It was $8.4-billion as of Thursday last week (I am rounding the number). So, if I were to take the value of the S&P 500 index as of last Thursday, as the Presidential tariff tweets began to roil the market at around 7:00 am on Friday, based on the highly liquid S&P futures, two Presidential tweets cost 100-points, high to low, or $840-billion. Since the range of trading was another 20-points higher before the tweets, if we add that to the total, he caused a $1-trillion market swing, just by posting two presidential tariff tweets.
As long as this trade war keeps going on, and as long as we can get such aggressive tweets coming out of left field, these types of swings can happen at any time. They can happen to the upside as well, if we get something along the lines of “trade negotiations completed, we have great deals with both the EU and China,” but something tells me that we may have to wait a while before we get tweets like that.
This was confirmed on Sunday night, after I wrote my commentary, when the President posted the following reversal of the EU stalemate at 6.15 pm:
This proved my point rather expeditiously – that he can also make the market move to the upside, President Trump’s Sunday post caused over a 70-point surge in S&P futures (over 1%) resulting in a $600-billion increase in market value (of the S&P 500) if it were trading in normal hours.
All I can say is that this is what happens if one trades based on TV and social media. Enjoy the ride – something tells me that such whipsaws are not over, but Friday’s action tells us that the reality was that we had risen too far, too fast, and the market was looking for excuses to correct – and the President provided those excuses early Friday morning. While in the week after the China trade truce and Monday last week, we were up six days in a row, they were followed by four down days, two of them quite big.
The President will surely send out another downbeat message, and the market will retreat again. When a correction gets going, people wonder how far it can go? No one knows for sure, as future events that affect the market in a big way have not happened yet. Still, it has to be noted that overbought markets tend to react more dramatically to bad news than oversold markets, which sometimes ignore bad news.
If negotiations with Europe are successful, it is safe to say that any deal will be announced sometime in June, or before July 9. That is also true for China. That means new recovery highs in the meantime are unlikely, and we will most likely be capped by a trading range with an upside at last week’s high (5,968).
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Estimating the bottom of the range is trickier. If we are lucky, the S&P 500 should bottom around 5,700, if there is no barrage of aggressive tweets or bad economic numbers. The market was up a lot in a short period of time – up 23% off the April intra-day low – and some backing and filling is absolutely normal.
What bothers me is that the S&P 500 completely disrespected the 200-day moving average as a support level on the way down in March and it remains to be seen how much it will be respected now (red line).
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Plus, we have a huge gap on the chart from when Treasury Secretary Scott Bessent announced the good news on the Chinese trade negotiation. Traders say, “Gaps are there to be filled,” and the market went up way too far way too fast not to be vulnerable to a correction. Conveniently, 5,700 is near the bottom of that gap on the chart. The S&P 500 can decline all the way to 5,500 for this to be a normal correction, but we would likely need some bad news to get there, so I would call that a worst-case “normal” correction.
Curiously, a total return chart of junk bonds already made a fresh 52-week high during the week of the China trade truce, and they carry a very high correlation with stocks. The firm junk bond market suggests that the economy has not deteriorated based on trade uncertainty, so things are holding up. If the economy stays resilient, a fresh all-time high in the stock market is likely upon completion of trade negotiations. In the meantime, we can see quite the flip in trading ranges, one which is yet to be defined on the downside.
Friday’s bad news on the trade front from the EU is the mirror image of China’s good news from two weeks ago. One key to remember is that these are still trade negotiations and not yet trade deals, and there are 18-major trading partners we need to make trade deals with (17 if you count the UK as a done deal).
We know that the EU is problematic, and that China is likely to be problematic, based on the fact that they did not live up to the commitments taken in the first Trump administration, so any trade deal they make should be viewed with suspicion. Still, those are long term considerations with China, and I would not put it beside them to make a really good-looking deal for as long as Mr. Trump is in office and after that they go back to their old ways. This is precisely what they did in the first Trump administration.
All content above represents the opinion of Ivan Martchev of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
The Press (and Investors) No Longer Fear Tariffs, But the Fed Still Does
Income Mail by Bryan Perry
The Aerospace Defense Sector is Looking Bullet Proof
Growth Mail by Gary Alexander
Saluting Some Great Heroes of Economic Freedom…on Flag Day
Global Mail by Ivan Martchev
A Trillion Dollar Tweet – or Two
Sector Spotlight by Jason Bodner
Ignore the News Feed, For Your Psychological (and Financial) Health
View Full Archive
Read Past Issues Here
Ivan Martchev
INVESTMENT STRATEGIST
Ivan Martchev is an investment strategist with Navellier. Previously, Ivan served as editorial director at InvestorPlace Media. Ivan was editor of Louis Rukeyser’s Mutual Funds and associate editor of Personal Finance. Ivan is also co-author of The Silk Road to Riches (Financial Times Press). The book provided analysis of geopolitical issues and investment strategy in natural resources and emerging markets with an emphasis on Asia. The book also correctly predicted the collapse in the U.S. real estate market, the rise of precious metals, and the resulting increased investor interest in emerging markets. Ivan’s commentaries have been published by MSNBC, The Motley Fool, MarketWatch, and others. All content of “Global Mail” represents the opinion of Ivan Martchev
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