The S&P 500 Index continued rising and neared its all-time high on Friday as some big tech companies like Nvidia and AMD rebounded. It ended the week at 7,575, with its perpetual futures on Hyperliquid ticking downwards today. This article explains some of the top catalysts for the SPX Index and key ETFs like VOO and SPY.
S&P 500 Index to react to earnings season
The biggest catalyst for the SPX Index will be the upcoming earnings season, which kicks off on Tuesday when five of the biggest banks release their financial results. Five banks worth almost $2 trillion will release their numbers on that day.
They include companies like JPMorgan, Bank of America, Goldman Sachs, Citigroup, and Wells Fargo. A day later, more big banks like Morgan Stanley, Bank of New York, and PNC will publish their earnings.
In addition to these banks, large companies like Netflix, UnitedHealth, General Electric Aerospace, Intuitive Surgical, and BlackRock will release their financial results this week. These results will provide more information on how companies performed during the US-Iran war.
Wall Street analysts predict that the earnings season will be successful, with the average growth being 23.2%. In most cases, earnings are usually higher than what analysts expect. If this trend continues, there is a likelihood that earnings growth will be over 30%.
US consumer inflation data
The S&P 500 Index, VOO, and SPY ETFs will react to the upcoming US consumer price index (CPI) data on Tuesday. Economists believe that consumer prices softened a bit last month as gasoline prices fell modestly. The average gasoline price has dropped to $3.8820 from last month’s $4.1290.
While gasoline prices have dropped, service inflation has remained at an elevated in the past few months. For example, utility bills have risen recently because of the artificial intelligence (AI) boom.
The average estimate is that the headline Consumer Price Index (CPI) dropped by 0.1% in June after rising by 0.5% in the previous month. Core CPI, which excludes the volatile food and energy prices, is expected to come in at 0.3%. The US will publish the Producer Price Index (PPI) data a day after that.
These inflation numbers will help to determine the next phase of the Federal Reserve. A higher-than-expected inflation report would push the Federal Reserve to maintain a more hawkish tone later this year.
FOMC minutes released recently suggested that officials debated the pros and cons of hiking interest rates in the coming months. Some officials supported hiking rates later this year, while other supported cutting rates if inflation started moving downwards.
US-Iran tensions
The other key catalyst for the S&P 500 Index and its top ETFs like SPY and VOO will be the new developments from Iran. The US launched the third phase of strikes overnight, attacking key military targets.
This happened after Iran announced that it had closed the Strait of Hormuz. As a result, crude oil prices rose on Hyperliquid. Signs of an escalation between the two sides will lead to more volatility in the stock market.
AI jitters to move US stocks
The US stock market will react to the new developments in the AI industry. Last Friday, stocks jumped after South Korea’s SK Hynix launched the biggest IPO of a foreign company in the United States after Alibaba.
Another important AI news came over the weekend when Apple announced a major lawsuit against OpenAI, alleging that the latter stole its trade secrets in its hardware push. It is unclear how this lawsuit will affect the stock market this week, but some OpenAI-related stocks like Nvidia and Broadcom may move.