- The S&P 500 stock index loses 0.28% on the day after reaching a new all-time high at 6,129.
- The US S&P Global Manufacturing PMI came in at 50.1, above analyst estimates.
- CF Industries shares fall 7.50% daily, reaching two-week lows.
- Investors’ attention will focus on the Federal Reserve’s monetary policy decision next Wednesday.
The S&P 500 reacted lower after reaching a new all-time high at 6,129, attracting aggressive sellers that took the index to a daily low of 6,087. Currently, the S&P 500 is trading at 6,096, down 0.28% on the day.
The S&P 500 ends the day in a negative zone after mixed data from the US.
According to information from Markit Economics, the preliminary S&P Global services PMI for January stood at 52.8, below the 56.5 estimated by analysts and the 56.8 reached in the previous month. In contrast, the preliminary S&P Global manufacturing PMI for the same period stood at 50.1, above the 49.6 projected by the market and the 49.4 recorded in December.
The company specialized in manufacturing and distributing nitrogen fertilizers, CF Industries (CF), presents a drop of 7.50% today in its share price, reaching lows not seen since January 10 at $87.71.
Investors’ focus will be on the Federal Reserve’s interest rate decision on Wednesday, January 29. The monetary authority is expected to keep the reference rate unchanged at 4.50%.
Levels to consider in the S&P 500
The S&P 500 reacted lower from a new all-time high reached earlier today at 6,129, forming short-term resistance in this area. On the downside, we see the closest support at 5,929, supported by the 9-period exponential moving average. The next support area is at 5,765, the pivot point of January 13.
S&P 500 4-hour chart
S&P 500 FAQs
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 US 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%.
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.
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.
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.
