The S&P 500 Index and its exchange-traded funds (ETFs) like VOO and SPY surged to their record highs last week as the first-quarter earnings season accelerated. The SPX Index was trading at $7,230, up sharply from last month’s low of $6,330. This article explores some of the top catalysts to watch this week.
S&P 500 Index to react to more corporate earnings
The main catalyst for the S&P 500 Index was corporate earnings, which have surged in the past few months. Data compiled by FactSet showed that the average earnings growth with 63% of all S&P 500 constituents having released their earnings was 22.7%, the highest rate since the first quarter of 2021.
This is the sixth consecutive quarter of double-digit earnings growth, and is much higher than the expected 13.7%. The growth was powered by big American banks like JPMorgan and Goldman Sachs, which benefited from the ongoing US-Iran war’s volatility.
Top big tech companies like Microsoft, Amazon, Google, and Apple reported strong financial results, helped by the robust AI boom. These firms also boosted their AI capital spending to over $725 billion from $650 billion in the last corporate earnings.
More American companies will continue releasing their financial results this week. Palantir Technologies will be the first large company to release its results on Monday. The other top companies to watch on Monday are Vertex Pharmaceuticals, Williams Companies, Diamondback Energy, and On Semiconductor.
Companies like AMD, Arista Networks, Pfizer, Duke Energy, and KKR will release their numbers on Tuesday. KKR’s numbers are important as they will provide more information about the private credit sector that has come under pressure in the past few months. Marathon Petroleum, Cummins, and Emerson Electric will release their numbers.
The additional companies to watch this week are Realty Income, AppLovin, Walt Disney, Uber, Marriott, CVS, DoorDash, Apollo Global Management, McDonald’s, Gilead Sciences, and Monster Beverage.
US non-farm payrolls data
The S&P 500 Index, VOO, and SPY ETF indices jumped after the Federal Reserve delivered its interest rate decision. In a statement, the bank left rates unchanged between 3.50% and 3.75%. It also hinted that it will start cutting interest rates later this year as the economic weakness continues.
The index also reacted to the latest US GDP report, which showed that the economy grew by 2% in the first quarter, a big improvement from the fourth quarter’s 0.5%.
Looking ahead, the next main catalyst for the index is the upcoming US non-farm payrolls (NFP) data, which will come out on Friday this week. Economists expect the data to show that the economy added over 73k jobs in February, a big drop from the 153k it created a month earlier. These numbers are important as they will help the Fed when delivering its rate decision.
US-Iran war progress
The S&P 500 and its ETFs, like VOO and SPY, will also react to the ongoing US-Iran conflict, which has continued recently.
The two countries are now in a prolonged ceasefire as they assess who will blink first. Last week, the Pentagon gave President Trump the key options available, including a limited strike on key Iranian infrastructure, seizing the enriched uranium, and taking control of the Strait of Hormuz.
There are signs that American stocks have started to ignore the soaring crude oil prices, with the S&P 500 Index reaching its all-time high as crude oil jumped. That’s because of the strong corporate earnings and AI spending.
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