The S&P 500 Index and its ETFs, like the SPY and VOO, will have a highly volatile week as investors react to several potential catalysts, including macro data, geopolitical events, and earnings.
The index, which tracks the biggest companies in the United States, was trading at a record high of $6,965.
Federal Reserve DoJ subpoena
One of the key catalysts for the S&P 500 Index and its ETFs, like the SPY and VOO, is the happenings at the Federal Reserve and its independence.
In a statement, Jerome Powell said that the bank received subpoenas from the Justice Department, which threatened a criminal indictment.
The events related to a Congressional testimony that Jerome Powell gave regarding the renovations at the bank.
However, the reality is that the new threat is due to the ongoing pressure on the bank to cut interest rates. Donald Trump has called for aggressive rate cuts since he became president.
As such, he may use the potential indictment as a pretext for firing Powell. Last year, he used a lawsuit by the Justice Department to fire Lisa Cook, a decision that was temporarily stopped by the court.
Geopolitical events such as Iran protests
Another potential catalyst for the S&P 500 Index is the ongoing protests in Iran, which could lead to the regime’s downfall.
According to Bloomberg, military leaders have briefed Donald Trump on possible strikes.
Trump has also continued to warn the regime about potential actions as the protests continue.
As a result, data on Polymarket show that odds of Ayatollah Khamenei being out as the Supreme Leader by January 31st rose to 21%. Odds of him being out by December 31st have soared to 60%.
Similarly, the odds that the country’s president, Masoud Pezeshkian, will be out by December 31st rose to 60%.
Corporate earnings
The S&P 500 Index and its ETFs will also react to the upcoming earnings season, which will start this week, with big banks like JPMorgan, Wells Fargo, BNY, Bank of America, Citigroup, Morgan Stanley, and Goldman Sachs publishing their results.
Other top companies that will release their numbers this week are BlackRock, State Street, PNC, Charles Schwab, and Delta Air Lines.
A report compiled by FactSet shows that the average estimate is that the earnings growth for the S&P 500 Index is 8.3%, which would mark the tenth consecutive quarter of earnings growth.
In reality, the final earnings growth is often 5% to 6% higher than the estimates. As such, the index’s growth will likely be 13%.
American companies will likely continue the strong earnings this year as the impact of Donald Trump’s tariffs eases and inflation continues falling.
US macro data
The other key catalyst for the S&P 500 Index and its ETFs, like SPY and VOO is that the US will publish the latest inflation and retail sales data.
The Bureau of Labor Statistics (BLS) will publish the December consumer inflation report on Tuesday and the producer price index on Wednesday.
Economists expect the data to show that inflation remained above 2.5% in December.
However, there are rising odds that inflation will continue easing as gasoline fell to a multi-year low and mortgage rates continued their downward trend.
SCOTUS decision on Donald Trump’s tariffs
The S&P 500 Index will also react to the closely-watched Supreme Court decision on the legality of Donald Trump’s tariffs on goods imported from other countries.
This decision was expected to happen on Friday last week. Analysts now expect the bank to deliver it on Wednesday this week.
Odds are that the court will rule that these tariffs were illegal, a move that would boost the stock market.
However, Trump has other tools to use and achieve the same result over time.
S&P 500 Index strong technicals
The S&P 500 Index has also formed strong technicals that may lead to more gains over time.
It has moved above the Supertrend indicator and formed an inverted head-and-shoulders pattern, a common bullish continuation sign.
Therefore, it is likely that the index will continue rising and move to the key resistance level at $7,000 this week.