The S&P 500 Index and its top ETFs, like State Street’s SPY, Vanguard’s VOO, and BlackRock’s IVV jumped for two consecutive days. It jumped to $7,430, up modestly from this month’s low of $7,240. This article looks at some of the top news to watch this week.
The first main catalyst for the S&P 500 Index and other ETFs is the US-Iran deal to end the war. President Donald Trump confirmed that the US will sign a deal today. Iran, on the other hand, insisted that the deal may be signed at a later date and that it will do so electronically.
Still, there is a risk that a deal will flop as it has done in the past. For example, there is a likelihood that Israel and its lobby in the United States will work to undermine the deal. For example, Israel has committed to continuing fighting in Lebanon, where it has killed thousands of people.
A deal between the US and Iran will be bullish for the stock market. For one, it will lead to lower crude oil prices, which will lower inflation in the country. Data released last week showed that the headline Consumer and Producer price index jumped to 4.2% and 6.4% in May, respectively.
Such a move will also lead to lower bond yields. Indeed, the ten-year yield dropped to 4.8%, while the five-year fell to 4.21%. That is a sign that investors believe that the Federal Reserve will be dovish.
The S&P 500, IVV, SPY, and VOO ETFs will also react to the upcoming Federal Reserve interest rate decision. This will be a crucial decision because it will be the first one by Kevin Warsh, whom Trump nominated to replace Jerome Powell.
Economists are unanimous in that the Fed will decide to leave interest rates unchanged between 3.50% and 3.75%. As such, the headline rate decision will have a minimal impact on the stock market. Instead, traders will react to Warsh’s statement, which will provide more information on what to expect.
A hawkish tone will raise Fed independence concerns as it may start a feud between Warsh and Trump.
In addition to the Fed, the Bank of England (BoE), Bank of Japan (BoJ), Brazilian, Swiss, Norges, and Russian central banks will also deliver their interest rate decisions this week.
There will also be some major macro news from the United States, including US retail sales, initial jobless claims, export and import prices, and industrial production.
SpaceX post-IPO performance
The S&P 500 Index will also react to the performance of SpaceX, which went public on Friday. SpaceX’s stock jumped by 19%, with its market capitalization crossing the $2 trillion mark. This IPO made Elon Musk the world’s first trillionaire.
Still, while the SpaceX IPO was a success, the hard part will start this week. Historically, newly listed companies often retreat after a few days. As such, if this happens, there is a likelihood that the stock market will also retreat as investors start booking profits.
