- The S&P 500 tests a new all-time high at 5,669.56 points.
- Markets are anticipating a 50 basis point rate cut by the Fed.
- US retail sales beat expectations in August.
The S&P 500 hit a new all-time high on Tuesday, reaching 5,669.56 points just after the opening of Wall Street. The index subsequently lost ground, falling to a daily low of 5,612.92. At the moment, the S&P 500 is trading around 5,622.31 points, losing 0.17% on the day.
S&P 500 could test a new top with Fed announcement
Index traders are fully focused on the decision of the US Federal Reserve, which will announce on Wednesday 18 September whether it will cut its interest rates by 50 basis points (bp), as the market expects, or by 25 bp. Strong volatility is expected with the announcement. The CME Group’s FedWatch tool currently places the chances of a 50 bp cut at 63% and the chances of a quarter-point reduction at 37%.
Read: Why is the Federal Reserve cutting interest rates and what does that mean?
On the other hand, the markets celebrated in the pre-opening of the American session that US retail sales for the month of August grew by 0.1% monthly in August instead of falling by 0.2% as expected by experts.
S&P 500 Levels
Although it is losing some ground late in the US session, this is the sixth day that the S&P 500 has posted higher highs in a row. Above the current all-time high, the index will find a barrier at 5,700 points.
If it falls, a pullback below 5,600 would point towards 5,500, which could then lead to a drop to the 5,400 area, where the September low is located.
The S&P 500 FAQs
The S&P 500 is a widely followed stock market index that measures the performance of 500 public companies and is considered a broad measure of the U.S. stock market. Each company’s influence in the index calculation is weighted by market capitalization. Market capitalization is calculated by multiplying the number of shares traded in the company by the share price. The S&P 500 has achieved impressive returns: $1.00 invested in 1970 would have yielded a return of nearly $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.
Companies are selected by committee, unlike other indexes where they are included based on set rules. They must still meet certain eligibility criteria, the most important of which is market capitalization, which must be at or above $12.7 billion. Other criteria include liquidity, domicile, market capitalization, industry, financial viability, length of listing, and representation of sectors of the U.S. economy. The nine largest companies in the index account for 27.8% of the index’s market capitalization.
There are several ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFDs) to place bets on the price direction. Additionally, index funds, mutual funds, and exchange-traded funds (ETFs) that track the S&P 500 can be purchased. The most liquid of the ETFs is the London Stock Exchange ETF. The most liquid of the ETFs is the State Street Corporation SPY. The Chicago Mercantile Exchange (CME) offers futures contracts on the index, and the Chicago Board of Options (CMOE) offers options, as well as ETFs, inverse ETFs, and leveraged ETFs.
There are many factors that drive the S&P 500, but it is primarily the aggregate performance of the companies that comprise it, as revealed in their quarterly and annual earnings reports. US and global macroeconomic data also contribute, as they influence investor confidence, which if positive, boosts earnings. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500, as it affects the cost of credit, on which many companies rely heavily. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
