S&P 500 Index

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Important events

Sep 232021

The Fed keeps things steady (for now)

The market has been waiting anxiously for the results of The Federal Reserve’s quarter-end meeting this week, hoping for more information on its tapering schedule, interest rates, and economic forecast. For now, things are staying largely as they are, with the central bank holding rates steady for the time being. However, it says that tapering will begin “soon,” with plans to scale back asset purchases as early as November.

Though interest rates remain near zero, tapering is usually an indication that a hike is on the way, although the agency has significantly cut its economic outlook for 2021. Federal Reserve Chairman Jerome Powell said:

While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate.

The S&P 500 had its best day since July on Wednesday, ending the day up 0.95%.
Rod Long / Unsplash
Sep 202021
🙄

Are the bears right?

The S&P 500 closes below its 50 day moving average for the first time since June, indicating that the bears might have been right and further corrections could be on the way.

The S&P 500 saw its worst day since August 18 on Friday, sinking 0.91% and closing below its short term moving average for the first time in nearly three months. The index has spent every session except one in the red for the last two weeks, and though the market is scattered this new development signals a bearish shift. JJ Kinahan, chief market strategist at TD Ameritrade, said:

These trends always end at some point but boy, you have that kind of run and it’s hard not to take what you’ve seen work and continue to put it into action until it doesn’t work. Right now, it’s been a pretty reliable source of an area where buyers come in to help support the market.

The market is waiting anxiously for this week's Fed meeting – which will give investors an idea of when what its tapering plans are.
Sep 172021

Will the S&P 500 turn green for the week?

The S&P 500 had its best day in three weeks on Wednesday, but it still looks like it’ll close another week in the red as investors wait for next week’s Federal Reserve meeting.

Tuesday’s inflation data showed that inflation has risen less than expected in the last month, which helped ease fears that the economic comeback was slowing. Prices lifted 0.86% on Wednesday, the best daily gain in almost three weeks, but prices are still down for the week as the market chews its nails over next weeks Fed meeting – which will give investors an idea of when what its tapering plans are.

Analysts are all over the map when it comes to what the rest of 2021 will look like. There are some who see a correction of anywhere between 10% and 15%, but others like JP Morgan see a 6% hike by the end of the year on the back of business cycle momentum and the holiday season. JP Morgan analysts wrote:

As long as Covid continues to ease, strong momentum should continue into 2022 as businesses start to rebuild depleted inventories and ramp-up capex from historically depressed levels. At the same time, cross-border activity has the potential to more meaningfully rebound for the first time since the onset of the pandemic.

The S&P 500 ended Thursday down 0.15%.
Maxim Hopman / Unsplash
Sep 132021
📉

S&P 500 logs weekly losses

Last week wasn’t great for the S&P 500, which lost ground over five straight sessions for the first time since February. The index hasn’t lifted more than 1% in over a month.

For the first time since February the S&P 500 has faced losses for five sessions in a row, as investors begin to worry about the Fed's stimulus tapering timetable and potential tax hikes. Things were made worse by the recent equity market correction – as of Friday, listed stocks were down on average 10% from their 52-week high.

The S&P has been struggling to see any notable gains, failing to lift over 1% in a single day in over the past month. Seema Shah, chief strategist at Principal Global Investors, is still cautiously optimistic though:

The fundamentals are still extremely supportive, financial conditions are very easy. We’re looking at a new phase in the business cycle or at least the next stage of it. We’ve got markets inevitably in transition and this is a time where you have to be really, really careful which companies you’re investing in.

Prices ended the week down 1.69% at $4,458.57.
Sep 102021

Banks weigh in on what the rest of the year holds

The S&P 500 has spent the week in the red, ending Thursday down for its fourth session in a row, and Wall Street comes in mixed on how the rest of the year will look.

The S&P 500 has been dealing with an extended Labor Day hangover it seems, spending the week in the red as a couple of banks came out with predictions on what the rest of the year holds for the high-profile index – and opinions are pretty mixed.

Earlier this week, Morgan Stanley (MS) predicted a correction of between 10% and 15% by the end of the year, saying the drop is “necessary to restore risk premiums and preserve forward returns”. The S&P 500 Index has been on the up-and-up this year, lifting over 20% since January and last week notching its 55th record closing high of the year – all without seeing a single drop of more than 5%.

Bank of America (BAC) is slightly more optimistic, seeing a decline of only 6% before year-end on the back of pressure on margins from rising costs. BofA (BAC) also assigned a 2022 year-end target of 4,600 – up only 2% from current levels.

UBS (UBS) is most optimistic of all, assigning the index the highest price target on Wall Street at 4.650. The bank cited a slow-down in COVID cases, impressive Q2 earnings, and increasing growth activity, and said:

Equities are likely to sell off at some point in coming weeks as investors brace for higher yields, taxes, slowing data, etc. But peak growth does not mean a deep slowdown is imminent.


The S&P 500 ended Thursday down 0.46% despite news that jobless claims fell to a near 18-month low, which should ease fears of slowing economic recovery; but got people worried that the Fed would be scaling back its accommodating pandemic-induced policies. Chris Rupkey, chief economist at FWDBONDS, gave his two cents:

There is likely to be a fierce debate at the coming Fed meeting on how tight the labor market is, but if policymakers focus on the most timely data we've got, they will realize that the labor market is close to meeting their more stringent criteria for an interest rate hike let alone the trigger for tapering.
Sep 082021

Could the S&P 500 summer streak be about to end?

Morgan Stanley predicts a market correction of up to 15% for the S&P 500 before the end of the year after a too-good-to-be-true 2021.

The S&P 500 Index has been on the up-and-up this year, lifting over 20% since January and last week notching its 55th record closing high of the year – all without seeing a single drop of more than 5%. The bull run has been fuelled by a combination of retail investors getting involved in meme stock mania and the masses of fiscal and monetary support people have been given in the face of the COVID-19 pandemic.

The index had certainly had a hot girl summer, up 13% since the beginning of April, but it looks like Autumn could be colder than usual with Morgan Stanley predicting a correction of between 10% and 15% by the end of the year. Analyst Lisa Shalett said:

While we see the economic cycle and the bull market remaining intact, we think a correction is necessary to restore risk premiums and preserve forward returns for selective and active stockpickers. The broad index needs to pause, consolidate its historic run and position for lower liquidity, higher real interest rates and higher inflation.