Top 3 catalysts for the S&P 500 and Nasdaq 100 indices this week

The S&P 500 and Nasdaq 100 indices have maintained their volatility in the past few weeks as top American companies started publishing their financial results and as the US-Iran war resumed. This article highlights some of the top three catalysts for the indices and their ETFs, like VOO, SPY, and QQQ.

S&P 500 vs Nasdaq 100 charts | Source: TradingView

S&P 500 and Nasdaq 100 indices to react to earnings 

The earnings season has escalated in the past few days. Top US banks like Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo have already published strong financial results, helped by their trading and investment banking franchises.

Top technology companies like Alphabet, Tesla, and Netflix have already published their financial results. They all plunged for several reasons. Netflix stock dropped after the company stopped publishing some user numbers, a sign that it expects the growth to slow.

Tesla shares retreated after the company’s gross profits dropped and as its free cash flow turned negative. Alphabet stock dropped after boosting its capital expenditure. 

FactSet data shows that 27% of all companies in the S&P 500 Index have already published their earnings. The average earnings growth rate stood at 37.9%, much higher than the expected 23.6%. If this is the real figure, it will be the highest growth rate since Q3’21 when earnings grew by 40.3%.

Top American companies will release their financial results, with the most important ones being names like Microsoft, Apple, Amazon, and Meta Platforms. In addition to this, other companies like Visa, Coca-Cola, Boeing, S&P Global, Corning, Costco, Lam Research, and Mastercard will release their numbers.

US-Iran war updates

The S&P 500 and Nasdaq 100 indices will react to the latest updates on the US-Iran war. After 13 days of strikes, the US paused on Saturday, dragging crude oil prices lower on Hyperliquid. 

According to the NYT, Trump decided to pause the attacks because of his fears of the US stockpiles. He is also concerned that an extended war will negatively impact Gulf allies that have become targets of Iranian attacks. Steven Cheung, the White House communications director said that Trump has:

“always been consistent in saying he prefers a diplomatic solution, but he continues to retain all options if Iran continues terrorist activities in the Strait of Hormuz or against allies.”

Federal Reserve interest rate decision

The other key catalyst for the Nasdaq 100 and S&P 500 indices is the upcoming Federal Reserve interest rate decisions and macro data. The bank is expected to leave interest rates unchanged at 3.50% and 3.75%.

Recently, however, there are signs that the Fed will lean towards hiking interest rates as inflation remains at an elevated level. Gasoline prices have jumped to $4.1 as the US-Iran war has escalated.

Odds of a Fed interest rate hike happening this year have jumped to over 70% on Polymarket. 

In addition to the Fed decision, the stock market will react to the upcoming durable goods orders, house price index, consumer confidence, GDP, and personal consumption expenditure (PCE) numbers.