- US stock markets will return to action on Tuesday after a long weekend.
- European stock indices start the week on a mixed note.
- The Federal Reserve will release minutes from its January policy meeting on Wednesday.
US stock markets will be closed on Monday for Presidents' Day. The main European stock indices are trading mixed. At the time of writing, Germany's DAX 30 was down 0.4% at 17,051, the Euro Stoxx 50 was down 0.35% at 4,748.73, Italy's FTSE was trading flat, while Spain's IBEX 35 and Britain's FTSE 100 were up 0.2. %.
Stock market news
- Hong Kong's Hang Seng Index fell 1.13% and closed on Monday at 16,155.61 points. The Shanghai Composite rose 1.56% to 2,910.54 points. After a bearish start to the week, the Japanese Nikkei 225 recovered late and closed flat at 38,470.38 points.
- The Dow Jones (DJIA) closed the previous week practically unchanged, at 38,628 points. The S&P 500 lost 0.42% to close at 5,005.56 and the Nasdaq fell 0.82% to 15,775.65.
- The communication services sector ended Friday in the red, with -1.56%, being the main S&P sector with the worst results, followed by the real estate sector, which lost -0.99% at the close. On the opposite side, the sector with the greatest gains on Friday was the S&P materials sector, which rose 0.51% on the day.
- Applied Materials Inc. (AMAT) was the biggest gainer in the S&P 500 on Friday, up 6.3%, ending the day at $199.57. Digital Realty Trust Inc. (DLR) lost 8.3% and closed the day on Friday at $136.22, the most bearish value.
- On Wednesday, the Federal Reserve will release minutes from its January policy meeting. On Thursday, market participants will analyze preliminary February manufacturing and services PMIs from Germany, the euro zone, the United Kingdom and the United States.
- The Bureau of Labor Statistics reported Friday that the Producer Price Index (PPI) of final demand in the United States rose 0.9% annually in January. This figure, after the 1% increase recorded in December, was above market expectations of 0.6%. The core PPI increased 2% annually in the same period, compared to 1.8% in December. On a monthly basis, the core PPI increased by 0.5%, following the 0.1% decline recorded the previous month.
- The University of Michigan Consumer Sentiment Index improved slightly to 79.6 in the preliminary estimate for February, up from 79.0 in January. The current situation index fell to 81.5 from 81.9 and the consumer expectations index rose to 78.4 from 77.1.
- Inflation in the United States, measured by the variation in the Consumer Price Index (CPI), fell to 3.1% annually in January, compared to 3.4% in December, the BLS reported on Tuesday. This figure exceeded market expectations, which placed it at 2.9%.
- The core CPI, which excludes food and energy price volatility, rose 3.9% in the same period and matched December's increase, beating analysts' estimate of 3.7%.
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.
