The S&P 500 Index and its top ETFs, like VOO, IVV, and SPY were highly volatile last week as investors reacted to the trade issues between the US and China, and credit quality concerns in the regional banking industry. This article explores some of the top news that will move these assets this week.
US and China meeting in Malaysia
One of the top catalysts for the S&P 500 Index recently has been the rising trade tensions between the biggest economies in the world.
China has flexed its muscle by announcing a series of provocative measures targeting the US. For example, the company announced a new law to control the supply of rare earth materials, a move it said was a response to US policies on sanctions.
China is now investigating Qualcomm, a top American semiconductor company. It has also launched some tariff measures targeting the US, while the US has warned that it will ramp up tariffs.
Therefore, the upcoming talks between Scott Bessent and his Chinese counterpart will be crucial as they will likely lead to de-escalation ahead of the upcoming meeting between Donald Trump and Xi Jinping.
US government shutdown continues
The other important catalyst for the S&P 500 Index and its ETFs, such as SPY and VOO, is the US government shutdown, which has now entered its fourth week.
This shutdown will likely continue for more weeks or months as the two parties remain further apart. Democrats have insisted that the spending package involve healthcare issues, which Republicans have rejected.
The government shutdown has an impact on American companies as it hurts the overall economic growth, including the labor market. The Trump administration has already fired thousands of people from the government so far.
On the positive side, the shutdown will push the Federal Reserve to cut interest rates in the coming meetings. The stock market does well when the bank is cutting rates, which explains why bond yields are falling.
Corporate earnings
The other notable catalyst for the S&P 500 Index will be corporate earnings from some key countries. Hundreds of firms in the index will publish their numbers this week.
The most notable names are Blackstone, the biggest player in the private equity industry, Intel, T-Mobile, and Honeywell.
Other blue-chip companies that will publish their numbers are two Magnificent seven companies: Netflix and Tesla. Other top companies that will publish their numbers during the week are General Electric, Coca-Cola, Philip Morris, RTX, Danaher, Procter & Gamble, and Southern Copper.
Data compiled by FactSet shows that 12% of companies in the S&P 500 Index have already published their numbers, with the average earnings growth being 8.5%. If this is the final figure, it will be the ninth consecutive quarter of earnings growth.
US inflation data
The other major catalyst for the S&P 500 Index and its ETFs like SPY, VOO, and IVV will happen on Friday when the Bureau of Labor Statistics (BLS) publishes the September inflation report.
The BLS will publish the latest inflation numbers despite the government shutdown because of its importance on social security issues.
Economists expect the data to show that the headline Consumer Price Index rose to 3.1 in September, while the core CPI moved up a bit to 3.2%.
These numbers are important because of their impact on the Federal Reserve, which has started to cut interest rates. A higher than expected report will make it difficult for the Fed rock cut interest rates in the next meeting as most officials have suggested.
The other notable catalysts for the S&P 500 Index will be any news related to artificial intelligence, which has been the main driver in the past few years, and statements from top Fed officials.
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