Top 3 catalysts for the S&P 500 Index this week: bonds, earnings season, CPI

The S&P 500 Index will be in the spotlight this week as investors react to the upcoming earnings season, US inflation data, and the bond market. It ended last week at 7,811, a few points below its all-time high of 7,845. It remains up by over 13% from its January levels. This article looks at some of the top catalysts for the index.

S&P 500 Index to react to US earnings season

The S&P 500 Index’s main catalyst for the week will be the upcoming earnings season, which will provide hints on the health of American companies. This season will start on Tuesday when top companies like JPMorgan, Wells Fargo, Goldman Sachs, and Citigroup will publish their numbers. 

ExxonMobil, ASML, Bank of America, Morgan Stanley, and BlackRock will release their numbers on Wednesday. Other top companies to watch will be Kinder Morgan, Taiwan Semiconductor, BHP Group, Charles Schwab, and Interactive Brokers. 

Analysts are highly optimistic about the upcoming earnings season. The average estimate is that earnings growth will be 29.5%. In most cases, the real figure is usually 8 points above the estimate, meaning that it will be at least 37%. 

The earnings growth will be driven by key sectors like energy and technology. Energy companies are benefiting from the ongoing oil price surge, while technology firms are gaining from the artificial intelligence boom. A strong earnings season, together with encouraging guidance will be bullish for the S&P 500 Index.

Bond market performance

The other main catalyst for the S&P 500 Index will be the performance of the bond market. Data shows that Treasury yields have cooled down a bit recently, with the ten-year falling from 5.363% to the current 5.242%. These yields softened after Trump announced a big deal to enable Russia to sell its diesel to the US and other countries. His hope is that diesel prices will drop further towards mid-term elections. 

Analysts caution that the diesel sales will not have a major impact on diesel prices. For one, Russia is already struggling to sell its diesel domestically after Ukraine destroyed most of its refineries. Also, the amount that it has promised is relatively limited compared to the global demand. 

US inflation data

The S&P 500 Index will react to the upcoming US consumer inflation report that comes out on Wednesday. Economists expect the data to show that the headline Consumer Price Index (CPI) rose from 3.4% in August to 3.6% in September. Core inflation, which excludes the volatile food and energy prices, is expected to come in at 2.5%, slightly higher than the previous 2.4%.

These inflation numbers will help to predict what the Federal Reserve will do in the next meetings. A higher inflation report than expected will raise the possibility of the Fed hiking interest rates at least once this year. 

The main challenge, however, is that the recent data showed that the economy created just 29,000 jobs last month, much lower than what analysts predicted. 

In addition to these numbers, the S&P 500 Index will react to the upcoming statements by top Fed officials like Christopher Waller and Susan Collins.

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