Market Resilience Shines Despite Tariff and Inflation Concerns, Says Piper Sandler

The S&P 500 (SP500) reached a new all-time high on Wednesday, setting another milestone even as the market received limited support from the well-known Magnificent Seven stocks. This significant achievement demonstrates the overall strength of the stock market, even in the face of uncertainties surrounding tariffs and inflation.

Financial services firm Piper Sandler noted that while volatility is likely to persist in 2025, the resilience of the stock market remains evident. Investors have continued to show confidence, supporting an upward momentum in equities despite broader economic concerns.

In an investor note released on Thursday, Piper Sandler emphasized how market resilience has been a defining theme for the year so far. They pointed out that, even as negative sentiment grows due to macroeconomic headwinds, investors have largely refused to step back. Instead of reacting to short-term concerns, market participants have focused on long-term trends.

Investor Sentiment & Market Strength

The stock market has displayed strong performance year-to-date, with investors largely brushing aside fears surrounding tariffs and inflation. Piper Sandler noted that while market conditions are expected to remain somewhat turbulent, they believe investors will continue to prioritize technical trends over economic headlines.

The firm expects a shift in investor strategy, with market participants increasingly looking to smaller-cap stocks as Treasury yields decline, crude oil weakens, and the U.S. dollar pulls back. These macroeconomic factors have created a unique environment where investors may rotate capital away from large-cap stocks toward smaller and mid-sized companies, which could see renewed interest in 2025.

Key Technical Levels for Traders and Investors

Piper Sandler also provided key support and resistance levels that traders and investors should watch closely as the S&P 500 continues its upward trend.

Key Resistance Levels (Potential Ceiling for the Market)

• 6,129 – The previous all-time high, which serves as an important psychological and technical barrier.
• 6,156 – A Fibonacci extension level that traders often use to predict potential price movement.
• 6,200 – Another significant resistance level where market consolidation or pullbacks may occur.
• 6,272 – A further Fibonacci extension that could act as a long-term target for the index.

Key Support Levels (Potential Safety Nets for the Market)

• 6,009 – The 50-day moving average, a crucial technical indicator used by many traders to gauge short-term momentum.
• 5,905 – 5,871 – These levels correspond to the January 15th price gap, marking an area where buying interest may emerge.
• 5,800 – A round-number psychological level that could provide additional support.
• 5,773 – The January low, representing a key downside threshold.

With the S&P 500 currently trading at 6,144.14, it remains close to some of these key resistance levels. If the index continues its upward momentum and breaks through 6,156 or 6,200, it could signal further bullish activity. However, should the market experience a pullback, investors will likely watch support levels such as 6,009 or 5,905 to assess whether buying opportunities emerge.

Investment Strategies: Mutual Funds and ETFs for S&P 500 Exposure

For investors looking to gain exposure to the S&P 500, various mutual funds and exchange-traded funds (ETFs) offer an accessible way to invest in the broader market. Some of the notable funds that track the S&P 500 include:

Mutual Funds:

• Fidelity 500 Index Fund (MUTF:FXAIX)
• Vanguard 500 Index Fund Admiral Shares (MUTF:VFIAX)
• Vanguard Institutional 500 Index Trust (MUTF:VFFSX)

Exchange-Traded Funds (ETFs):

• SPDR S&P 500 ETF Trust (NYSEARCA:SPY)
• Vanguard S&P 500 ETF (NYSEARCA:VOO)
• iShares Core S&P 500 ETF (NYSEARCA:IVV)
• Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP)

Additionally, for investors looking for leveraged exposure or inverse strategies, the following ETFs provide alternative approaches:

• ProShares Ultra S&P500 (NYSEARCA:SSO) – A leveraged ETF that aims to provide twice the daily performance of the S&P 500.
• ProShares UltraPro S&P500 (NYSEARCA:UPRO) – A 3x leveraged ETF, offering three times the daily returns of the index.
• ProShares Short S&P500 (NYSEARCA:SH) – An inverse ETF, designed to move opposite to the S&P 500.
• ProShares UltraShort S&P500 (NYSEARCA:SDS) – A 2x inverse ETF, offering double the inverse performance of the S&P 500.
• ProShares UltraPro Short S&P500 (NYSEARCA:SPXU) – A 3x inverse ETF, providing triple the inverse returns of the index.

Final Thoughts: Market Outlook and Investor Considerations

As 2025 progresses, the stock market has demonstrated remarkable resilience, pushing to new highs even as economic concerns linger. The ability of the S&P 500 to sustain upward momentum despite tariff and inflation worries underscores the confidence investors continue to have in equities.

Piper Sandler’s analysis suggests that while volatility may persist, long-term trends remain more significant than short-term headlines. The expectation of lower Treasury yields, weaker crude oil prices, and a softer U.S. dollar could drive investor interest toward smaller-cap stocks, creating new opportunities in the market.

For traders and investors, keeping an eye on key support and resistance levels will be essential for navigating potential market movements. Additionally, those looking for diversified exposure to the S&P 500 can consider a variety of mutual funds and ETFs as investment vehicles.

Ultimately, while challenges remain, the stock market’s ability to weather uncertainty and maintain strength continues to be a defining theme of 2025.