The S&P 500 Index has come under pressure in the past few days, moving from the year-to-date high of $7,620 to the current $7,354. This retreat continued amid the rising jitters that the AI boom is ending. This article highlights some of the top catalysts for the index and its ETFs like VOO and SPY.
A key catalyst for the S&P 500 Index will come out on Friday, when the US publishes the latest non-farm payrolls (NFP) data that will shed more color on the state of the US economy.
Economists predict the data to show that the economy added over 114k jobs in June, much lower than the 172k it added in May this year. Based on the last jobs numbers, there is a possibility that the job additions will be much higher than estimates. For example, in the last report, the 172k figure was higher than the expected 85k.
Economists expect the unemployment rate to remain at 4.3%, while the labor force participation rate is projected to hold steady at 61.8%. A stronger-than-expected report would increase the likelihood that the Federal Reserve either raises interest rates later this year or keeps them higher for longer. In a statement on Friday, Raphael Bostic, a senior Fed official, suggested that the central bank could still raise rates.
The odds of a rate hike have jumped as inflation has remained at an elevated level. A report released last week showed that the headline consumer inflation jumped to 4.2% last month. It has remained above the 2% target in the last five years.
The S&P 500 Index will also react to some notable earnings this week. However, unlike last week, when it reacted to the Micron earnings report, this week’s earnings will have a minimal impact because they are not in the booming AI industry.
The most important results will come from Nike, the top apparel company. These results come at a time when the company is going through a major turnaround strategy, with investors questioning the slow pace of its turnaround strategy.
Constellation Brands will also publish its financial results this week, shedding more color on the business at a time when beer consumption is falling. It owns popular brands like Modelo and Corona.
AeroVironment, a small player in the defense industry, is also releasing its numbers on Monday, while General Mills will release on Wednesday.
The other key catalyst for the S&P 500 Index and its ETFs like VOO and SPY is the upcoming US-Iran tensions. Iran restarted this crisis on Friday when it launched strikes against a ship that disobeyed its orders. It also launched strikes against another ship on Saturday.
The US responded to this crisis by launching strikes against key Iranian targets. On the other hand, Iran responded by striking US military installations in Bahrain. As a result, there is a likelihood that the crisis will escalate, which will push the stock market lower.