The S&P 500 Index and its top ETFs, like VOO and SPY will be in the spotlight this week as the market reacts to several notable events like macroeconomic data and earnings.
These events come as the index remains at an all-time high following the 30% surge from its lowest level in April this year. This article explores some of the top catalysts that will impact the S&P 500 Index and its top ETFs.
Earnings season
The most important catalyst for the S&P 500 Index this week will be the upcoming earnings season, which will provide more details about the impact of Donald Trump’s trade war.
JPMorgan Chase, Wells Fargo, BlackRock, Bank of New York Mellon, State Street will publish their results on Tuesday. These are notable numbers because JPM is the biggest American bank, while BlackRock is the largest asset manager globally.
The other top companies that will publish their earnings are Johnson & Johnson, Morgan Stanley, and Goldman Sachs. Netflix, GE Aviation, and American Express will be the top companies to watch.
Analysts expect that the S&P 500 Index will have a revenue growth of less than 5%, the worst metric since Q4’23. Still, this weak number could mark a bottom, which explains why it has jumped sharply in the past few months.
US inflation data
The other top catalyst for the S&P 500 Index is the upcoming US inflation data, which is scheduled on Wednesday this week. Inflation is a major number because it is part of the Federal Reserve’s dual mandate, together with the employment situation.
The US published strong nonfarm payrolls numbers earlier this month that showed that the economy created over 147k jobs in June, while the unemployment rate dropped to 4.1%.
That strong jobs report meant that the Federal Reserve will likely maintain a fairly hawkish tone. This stance will likely be confirmed if the US publishes strong inflation data.
Economists expect the economic report to show that the headline consumer price index (CPI) rose to 2.5% in June as companies adjusted prices to Donald Trump’s tariffs.
A higher inflation figure could push the Federal Reserve to maintain a highly hawkish tone. This would further fuel Donald Trump’s frustrations with the Fed as he has called for a 300 basis point cut. Bloomberg analysts said:
“We think the composition of price increases will likely resemble May’s report, with only modest tariff pass-through in goods categories offset by continued softness in services. Scraped price data show a mixed picture, with firming in categories like appliances and furniture, but declines in airfares and used cars.”
Trump trade war
The other notable catalyst for the S&P 500 Index and its top ETFs, like SPY and VOO, is Donald Trump’s trade war. He has continued sending letters to some of the biggest trading partners threatening of more tariffs.
He threatened a 30% tariff on all goods entering the US from the European Union and Mexico. He has also targeted other countries like Japan, Brazil, and Canada.
Most analysts believe that these threats are bargaining chips as the negotiations continue. An escalated trade war would be highly bearish on the S&P 500 Index.
Altogether, the S&P 500 Index will likely continue doing well this week since it has a bullish momentum.
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