- US stock index futures are trading slightly lower at the start of the week.
- The S&P 500 and Nasdaq Composite closed the previous week at new all-time highs.
- Fed Chairman Powell will testify before Congress later this week.
S&P 500 futures fell 0.15%, Dow Jones futures fell 0.25% and Nasdaq futures fell 0.05% before Monday's open.
The S&P 500 (SPX), Dow Jones (DJIA) and Nasdaq (IXIC) indices closed on Friday up 0.80%, 0.23% and 1.14%, respectively.
What you need to know before the stock market opens
The Dow Jones Industrial Average (DJIA) closed the previous week virtually unchanged at 39,087.39, the S&P 500 (SPX) rose almost 1% to close at a new all-time high of 5,137.07, and the Nasdaq Composite (IXIC) added more than 1% to finish at a record of 16,274.94.
The technology sector rose 1.78% on Friday, outperforming the rest of the major sectors, closely followed by the energy sector, which rose 1.17%. The utilities sector fell on Friday and closed the week down 0.72%.
NetApp Inc. (NTAP) rose 18,167% to close at $105.31 as Friday's biggest gainer. On the other hand, Zscaler Inc. (ZS) retreated almost 9.4% as the biggest loser of the day, falling to $219.23.
Assessing the latest developments in the equity markets, “the S&P 500 gained +0.95% last week (and +0.80% on Friday), meaning the index has now posted positive weekly gains for 16 of the last 18 weeks, the first time since 1971,” said Jim Reid, global head of economics and thematic research at Deutsche Bank, and continued:
“Speaking of milestones, the Russell 2000 hit its highest level since April 2022, jumping +2.96% for the week (and +1.05% on Friday), so the rally was quite broad. But It was technology stocks that led Friday's considerable rally, with the Magnificent 7 rising +1.27% (+1.74% on the week). Strong results from Dell Technologies (+31.62% on Friday) boosted semiconductors (+ 4.29%) and Nvidia (+4.00%) exceeded $2 trillion in market capitalization for the first time.”
Frequently asked questions about the S&P 500
What is the S&P 500?
The S&P 500 is a widely followed stock index that measures the performance of 500 publicly held companies, and is considered a broad measure of the American stock market. The influence of each company in the calculation of the index is weighted based on market capitalization. This is calculated by multiplying the number of company shares listed on the stock market by the share price. The S&P 500 Index has achieved impressive returns: $1.00 invested in 1970 would have produced a return of nearly $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.
How are companies chosen to be included in the S&P 500?
Companies are selected by a committee, unlike other indices where they are included based on established standards. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be equal to or greater than $12.7 billion. Other criteria are liquidity, domicile, stock market listing, sector, financial viability, length of time they have been listed on the stock market, and the representation of the industries in the United States economy. The nine largest companies in the index represent 27.8% of the index's market capitalization.
How can I trade the S&P 500?
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 direction of the price. Additionally, you can buy exchange-traded funds (ETFs), mutual funds, and index funds that track the S&P 500. The most liquid of the ETFs is State Street Corporation's 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.
What factors determine the S&P 500?
There are many factors driving the S&P 500, but primarily the aggregate results of its component companies, revealed in their quarterly and annual earnings reports. US and global macroeconomic data also contribute, influencing investor sentiment, which if positive drives 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 largely depend. Therefore, inflation can be an important driver, as well as other metrics that influence the Fed's decisions.
Eyes on Powell's testimony and US employment data
In its Semiannual Monetary Policy Report published on Friday, the Federal Reserve (Fed) reiterated that it is not appropriate to reduce the official interest rate until they have greater confidence that inflation will move sustainably towards 2%.
Fed Chairman Jerome Powell will present the monetary policy report and answer questions in a two-day appearance before Congress, beginning Wednesday.
On Friday, the U.S. Bureau of Labor Statistics will release the February employment report, which will include nonfarm payrolls, the unemployment rate and wage inflation figures.
The week focuses on Powell's testimony, US employment and the ECB decision [VÃdeo]
Frequently asked questions about the S&P 500
What is the S&P 500?
The S&P 500 is a widely followed stock index that measures the performance of 500 public companies and is considered a broad measure of the U.S. stock market. The influence of each company in the calculation of the index is weighted based on market capitalization. This is calculated by multiplying the number of listed shares of the company by the share price. The S&P 500 Index has achieved impressive returns: $1.00 invested in 1970 would have produced a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.
How are companies chosen to be included in the S&P 500?
Companies are selected by committee, unlike other indices where they are included based on established standards. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be equal to or greater than $12.7 billion. Other criteria are liquidity, domicile, market capitalization, sector, financial viability, listing time, and representation of the sectors of the United States economy. The nine largest companies in the index represent 27.8% of the index's market capitalization.
How can I trade the S&P 500?
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 price direction. In addition, you can buy index funds, mutual funds and exchange-traded funds (ETFs) that track the price of the S&P 500. The most liquid of the ETFs is the London Stock Exchange ETF. The most liquid of the ETFs is State Street Corporation's 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.
What factors drive the S&P 500?
There are many factors that drive the S&P 500, but primarily it is the aggregate performance of its component companies, revealed in their quarterly and annual earnings reports. US and global macroeconomic data also contribute, influencing investor sentiment, which if positive, drives 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 largely depend. 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.
