The S&P 500 index is one of
the biggest and most influential stock market indexes in the world. It was
formed in 1957 by Standard & Poors to track the 500 biggest companies
listed in the New York Stock Exchange (NYSE) and Nasdaq. By looking at the
biggest companies in the US, the S&P is used as a good indicator of the performance
of the US economy. The index opened to trade at $387. Today, the index has
grown to reach above $3,000, which is a 675% increase.
Yesterday, the S&P 500 index
rose slightly as investors waited for results from most of the biggest
companies in the United States. These results will come a week after about 15%
of all companies in the index released their results. Last week, results from
the five biggest banks in the US showed that they netted a record $30 billion
in profits in the second quarter.
Today, a number of companies in
the S&P 500 index will release. Some of the companies that will report are
3M, Avangrid, Biogen, Centene, Corning, Fifth Third, Harley-Davidson, Illumina,
iRobot, Keycorp, Kimberly-Clark, Lockheed Martin, Navient, PACCAR, PulteGroup,
Snap, Texas Instruments, TransUnion, United Technologies, Verizon, and Xerox.
Investors will pay attention to
various things in the today’s earnings. First, they will want to hear more from
United Technologies, which recently announced plans to merge with Raytheon. On
3M, they will want to know whether the company has done enough to return to
growth. This is after the company announced a weak quarter in the previous
earnings call. The company is also a good indicator of the ongoing trade war.
On Harley-Davidson, they will want to know how the company is changing to
attract the millennials.
Second, they will focus on Snap,
which is a leading millennial-focused social media company. They will want to
know whether the company is continuing to add more daily and monthly active
users. This year, Snap is one of the best-performing technology stocks.
Third, they will use PulteGroup’s
earnings as an indication of the US housing market. Pulte is one of the biggest
homebuilding companies in the US. Its results will come shortly before the US
releases the official existing home sales.
Ahead of these earnings, the
S&P 500 rose slightly to a high of $2992. This is shortly after the index
crossed the $3,000 milestone less than two weeks ago. On the chart below, the
index is trading above the 14-day and 28-day moving averages. The Average
Directional Index has moved lower while the RSI has moved slightly lower from
the overbought level. There is a likelihood that the index will trade above the
$3,000 level if the corporate earnings are good. If the earnings disappoint,
the index 78.6% Fibonacci Retracement may level of $2900.
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