The S&P 500 Index (SPX) remains under pressure this month, and this week’s events will determine whether it will bounce back. It was trading at 7,457 points, down by 2.10% from its highest point this year. This article highlights some of the key catalysts that will drive the SPX and VOO ETFs this week.
S&P 500 Index to react to key earnings
A key driver for the S&P 500 Index this week will be corporate earnings by some of the biggest American companies. While some large companies will publish on Monday, the most important ones to watch will report on Wednesday.
Tesla (TSLA) and Google (GOOGL), two members of the Magnificent 7, will release their numbers on Wednesday. These results come at a time when most companies in the group have pulled back substantially.
GE Vernova (GEV), Philip Morris (PM), Texas Instruments (TXN), AT&T (T), and Moody’s (MCO) will release their numbers on Wednesday. A day earlier, companies like Charles Schwab (SCHW), Chubb (CB), Danaher (DHR), General Motors (GM), and Northrop Grumman (NOC) will publish their numbers.
Other companies that will release their numbers on Thursday are Intel (INTC), T-Mobile (TMUS), Raytheon (RTX), Blackstone (BX), Honeywell (HON), Newmont Mining (NEM), and Lockheed Martin (LMT).
The earnings season has started well, with the top banks like Goldman Sachs (GS), JPMorgan (JPM), Morgan Stanley (MS), and Citi (C) benefiting from large IPOs and trading activity. FactSet (FDS) data shows that the earnings growth so far stands at 24.2%, higher than the expected 23%.
Of course, there were some disappointments, including Netflix (NFLX) and IBM (IBM). IBM stock plunged by over 20% in a day after the company warned about its growth as companies prioritized hardware spending. Netflix, on the other hand, started to withdraw key data, suggesting that its business was slowing.
Escalating US and Iran crisis
The S&P 500 Index will also react to the escalating crisis in the Middle East, where the US and Iran launched deadly attacks during the weekend. The US hit some major targets, including civilian infrastructure, leading to tens of deaths.
Iran also launched attacks against US targets, killing two people and injuring more others. In a statement, the Supreme Leader warned that the crisis will escalate further, pointing to the unreliability of Trump’s signature.
Crude oil prices have continued rising in the past few days, with Brent and WTI nearing $90. As such, there is a risk that the rising oil prices will lead to higher inflation. Data released last week showed that the headline consumer inflation eased to 3.5% in June from the previous 4.2%.
South Korean and AI jitters
The other key driver for the S&P 500 Index will be the happenings in South Korea, a country that has experienced substantial volatility in the past few weeks. KOSPI, its main benchmark, has dropped by over 20% from its highest point this year.
South Korea’s markets were closed on Friday, and traders will watch how they open on Monday. A plunge in key companies like Samsung and SK Hynix will likely drive US semiconductor and memory names lower.
Traders will also be on the lookout for the latest developments in China, where some companies have launched more advanced models. On Friday, top US stocks plunged after China’s Moonshot released the Kimi K3 model, which is beating popular US models like Claude and ChatGPT.
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