- US stock markets will return to action on Tuesday after a long weekend.
- European stock indices closed the first day of the week in a mixed manner.
- The Federal Reserve will release the minutes of its January policy meeting on Wednesday.
US stock markets will be closed on Monday for the Presidents' Day holiday. Europe's main stock indices ended the day mixed. Germany's DAX 30 fell 012 to 17,096.48, the Euro Stoxx was virtually unchanged at 4,765.04, Italy's FTSE was steady at 187.0, while Spain's IBEX 35 and the UK's FTSE 100 indices United Kingdom added 0.6% and 0.25%, respectively.
stock market news
- Hong Kong's Hang Seng Index fell 1.13% to close at 16,155.61 on Monday. The Shanghai Composite rose 1.56% to 2,910.54. After a bearish start to the week, Japan's Nikkei 225 staged a late recovery to end the day flat at 38,470.38.
- Dow Jones (DJIA) closed the previous week virtually unchanged at 38,628. 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% as the worst performing major S&P sector, followed by the real estate sector which lost 0.99% at the close. On the other hand, the sector that had the greatest gain on Friday was the S&P Materials Sector, rising 0.51% on the day.
- Applied Materials Inc. (AMAT) was the S&P 500's top gainer on Friday, rising 6.3% to end the day at $199.57. Digital Realty Trust Inc. (DLR) lost 8.3%, closing Friday trading at $136.22 as the biggest drop.
- The Federal Reserve will release the minutes of its January policy meeting on Wednesday. On Thursday, market participants will analyze preliminary February manufacturing and services PMI reports for Germany, the euro zone, the United Kingdom and the United States.
- The Bureau of Labor Statistics reported Friday that the producer price index (PPI) for final demand in the United States rose 0.9% annually in January. This reading followed the 1% increase recorded in December, but exceeded market expectations of 0.6%. The annual core PPI rose 2% in the same period, compared to a 1.8% increase in December. On a monthly basis, the core PPI rose 0.5% after falling 0.1% in the previous month.
- The University of Michigan Consumer Sentiment Index improved modestly to 79.6 in February's preliminary estimate from 79.0 in January. The current conditions 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, as measured by the change in the Consumer Price Index (CPI), fell to 3.1% annually in January from 3.4% in December, the BLS reported Tuesday. This reading exceeded market expectations of 2.9%.
- The core CPI, which excludes volatile food and energy prices, 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
The S&P 500 is a widely followed stock price 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 publicly traded shares of the company by the share price. The S&P 500 Index has achieved impressive returns: $1 invested in 1970 would have returned nearly $192 in 2022. The average annual return since its inception in 1957 has been 11.9%.
Companies are selected by a committee, unlike other indices where they are included according to established rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, time publicly traded, and representation of industries in the U.S. 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. Additionally, you can buy index, mutual, and exchange-traded funds (ETFs) that track the price of 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 Options Board (CMOE) offers options, as well as ETFs, inverse ETFs, and leveraged ETFs.
Many different factors 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 contributes as it impacts 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 corporations rely heavily. Therefore, inflation can be an important factor, as well as other metrics that impact the Federal Reserve's decisions.
