The most popular US index - SPX500 (also written as S&P 500), has started the week on a bullish momentum retaining its gains from the past weeks and printing a new high at 4,280.14 during the Asian session today.
The excitement over the reduction in the US inflation rate had given investors more reasons to embrace stocks and the index market. Hence, the bulls have dominated the index market for four consecutive weeks. This has dramatically favoured SPX 500, which has been bullish for the past month, closing each week with a solid bullish candle. The S&P 500 in the past month added over 554.74 pips gains to its price within the last 30 days. This could be calculated from its low in July at 3,725.40 to the new high in August at 4,280.14.
The current bullish trend in SPX 500 has been primarily supported by the reduction in the US inflation rate. The recent trend gave investors the hope that the Fed reserve will likely slow down on its pace of aggressive interest rate hikes during its next session in September. According to the inflation report last week, the US inflation rate has drastically reduced from its forty years high at 9.1% YoY to a lower level of 8.5% YoY. This marks an over 0.6% reduction in one significant move. Investors were convinced that the US economy was not headed into recession as many had feared.
SPX 500, the most popular US index, has benefited more from this renewal of interest in the US Index market, hence the reason for the massive uptrend witnessed so far.
Many fear that the current bull runs for SPX 500 might be reversing at any point this week. However, a break above the current level might signal a continuation of the bullish trend.
What is S&P 500?
SPX 500 is a primary US stock Index that tracks the performance of the most valuable 500 US stocks listed on the New York stock exchange. The SPX 500 has become popular today and is considered the best way to measure the US stock market performance. The stocks added to the SPX 500 are selected based on market capitalization. Here, stocks with the largest market capitalization exert more influence on this Index pair.
The market price of the SPX 500 index is generated by a company known as Ultronics System Corp. This company updates the cost of each company's stock that makes up the S&P 500 every 15 seconds.
The term SPX is a short used to represent 'The Standard and Poor Index’. This means the stocks added to the SPX 500 family could be considered the standard Stocks to be used in measuring every other US stock. Any stock that fails to match this standard could be regarded as 'Poor'.
A committee selects the stocks to be added to the SPX 500 family quarterly. This selection is based on many factors: the company's market capitalization, domicile, liquidity, listing exchange, and sector classification.
Traders often pay great attention to the ten significant stocks that make up the S&P 500 index. This is because these ten stocks make up over 30% of the total weightings of this index. Any significant shift in the prices of these major stocks predominantly affects the performance of the SPX 500. The list of these ten essential stocks has been provided below.
Ten Major stocks that make up the SPX 500
- Apple Inc. (AAPL)
- Microsoft Corp. (MSFT)
- Amazon.com, Inc. (AMZN)
- Tesla, Inc. (TSLA)
- Alphabet Inc. Class A (GOOGL)
- Alphabet Inc. Class C (GOOG)
- Nvidia Corp. (NVDA)
- Berkshire Hathaway Inc. (BRK.B)
- Meta Platforms Inc.
- UnitedHealth Group Inc.
- Significant factors that affect SPX 500
SPX 500 is primarily affected by the movements of the composite stocks that make up this index. This means the price of this index depends on the performance of the US stocks, especially the significant stocks that make up this index. One can assert that: all factors that influence the US stock market also affect the SPX 500 index.
Therefore, investors who trade the SPX 500 will need to pay great attention to the price movement of its constituent stocks. The company's development forecast, expected revenue, major news affecting the companies included on the list, economic data, major political events, interest rate increases, inflation reports, etc.
Will the bullish trend for SPX 500 continue?
SPX 500 has performed so well for four consecutive weeks now. It is currently facing strong resistance at its present level. A bearish candle is gradually manifesting on the weekly chart, suggesting a reversal might be imminent, primarily as the Fed's session in September draws nearer. The bulls need to break above the resistance above 4280.14 to convince investors that this pair is still bullish for this week.
Failure to hold above this level might give way to a retest of the support at 4,138.80.
Should the bulls break the current resistance at 4,280.14, we can look forward to more upside movement with the next target at 4,395.