The S&P 500 Index and its top ETFs like VOO and SPY staged a strong comeback on Friday as investors bought the dip in technology stocks after big companies revealed their AI spending details.
Top American companies like Microsoft, Google, Meta Platforms plan to spend over $660 billion in the AI industry this year, a big increase from what they spent last year. These spending plans boosted top companies like NVIDIA and AMD, which will supply the chips.
The SPX Index also jumped as investors bought the dip in beaten-down software companies like ServiceNow, Intuit, and Adobe. This article explores some of the top events to watch in the S&P 500 Index this week.
S&P 500 Index to react to top corporate earnings
Data compiled by FactSet shows that 59% of companies in the S&P 500 Index have already published their financial results. Most of these companies have reported strong results, with the average earnings growth being 13%. If this is the final number, it will be the fifth consecutive quarter of double-digit growth.
More large companies will release their numbers this week. Apollo Global, the giant private equity and private credit industry, will be the top company to watch on Monday as it releases its numbers. These results come as most companies in the industry have plunged as private credit fears spread. APO has dropped by 30% from its all-time high.
Coca-Cola, Gilead Sciences, Welltower, S&P Global, CVS, Marriott, and Spotify will release their numbers on Tuesday. Cisco, McDonald’s, T-Mobile, Shopify, and AppLovin will publish their results on Wednesday. The other top companies to watch are Applied Materials, Arista Networks, Unilever, and Vertex Pharmaceuticals.
Potential US strike on Iran
The other major catalyst for the S&P 500 Index and its ETFs, like VOO and SPY will be on geopolitics. The index jumped sharply on Friday as Donald Trump confirmed that talks with Iran were going on well.
Therefore, the market believes that the two sides may reach a deal in the coming days or weeks. Odds of a deal have jumped in the past few days. However, there are concerns that Israel and neocons will push Donald Trump to a war with Iran.
Iran has warned that it will respond to a US attack by bombing bases in the region and Israel. It has also warned that it will block the Strait of Hormuz, where most oil passes through.
Therefore, an attack would have a major impact on the oil and stock market. The S&P 500 Index may crash after the attack happens and then rebound a few days later.
US Nonfarm Payrolls data
The S&P 500 Index and its ETFs will also react to the upcoming US non-farm payrolls data, which will come out on Wednesday this week.
This report, which was scheduled on Friday, will come out on Wednesday because of the recent government shutdown.
Economists expect the data to show that the economy created 70k jobs in January, higher than the 50k it created in the previous month. The unemployment rate will likely remain unchanged at 4.4%.
The upcoming jobs numbers are important as they will help the Federal Reserve when making its interest rate decision in March. However, their impact will be limited as the Fed has already hinted that it will not cut rates despite the pressure from the US president.
The other macro data to watch this week will be the upcoming US retail sales and existing home sales. Top Federal Reserve officials like Stephen Miran, Michelle Bowman, Lori Logan, Beth Hammack, and Raphael Bostic will talk.
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