US stocks gain traction early Monday before ending the day mixed but still in record territory

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The S&P 500 (SPX) index was broadly unchanged to close the session at 5,021.84. The Dow Jones (DJIA) climbed 0.33% to end at 38,797.38, while the Nasdaq (IXIC) lost 0.30% to finish at 15,942.55.

Stock market news

  • The Utilities Sector was the best-performing major sector in the S&P 500 on Monday, rising 1.14% on the day. On the other hand, the Technology Sector sank 0.77%.
  • Diamondback Energy Inx. (FANG) rose over 9% as one of the top gainers in the first half of the session, alongside VF Corp. (VFC) which climbed nearly 14% for the day. The biggest decliner is Motorola Solutions Inc. (MSA), down over 3.2%.
  • Nasdaq Composite rose more than 2% last week and the S&P 500 posted gains for the fourth consecutive week to post a record-high closing above 5,000. Dow Jones underperformed and was virtually unchanged for the week.
  • The US Bureau of Labor Statistics (BLS) announced on Friday that it revised the monthly Consumer Price Index (CPI) increase for December lower to 0.2% from 0.3%.
  • Dallas Federal Reserve (Fed) Bank President Lorie Logan said that there is no urgency to cut interest rates. Logan acknowledged that there has been “tremendous progress” on bringing down inflation but noted that she would want to see further evidence on inflation to confirm the progress is durable.
  • The US Department of Labor reported that there were 218,000 Initial Jobless Claims in the week ending February 3, down from the previous week’s revised 227,000.
  • On Tuesday, the BLS will release January CPI data. The headline annual CPI is forecast to rise 3% on a yearly basis, at a softer pace than December’s 3.4%. The Core CPI, which excludes volatile food and energy prices, is expected to increase 3.8%. 
  • Arista Networks Inc. (ANET), Cadence Design Systems Inc. (DNS) and Waste Management Inc. (WM) are among top companies that will release earnings reports after the closing bell on Monday.
  • Later in the week, January Retail Sales, Industrial Production and Producer Price Index (PPI) data will be featured in the US economic calendar.

S&P 500 FAQs

The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.

Companies are selected by committee, unlike some other indexes where they are included based on set rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, length of time publicly traded, and representation of the industries in the economy of the United States. The nine largest companies in the index account for 27.8% of the market capitalization of the index.

There are a number of ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFD) to place bets on the direction of the price. In addition, that can buy into Index, Mutual and Exchange Traded Funds (ETF) that track the price of the S&P 500. The most liquid of the ETFs is State Street Corporation’s SPY. The Chicago Mercantile Exchange (CME) offers futures contracts in the index and the Chicago Board of Options (CMOE) offers options as well as ETFs, inverse ETFs and leveraged ETFs.

Many different factors drive the S&P 500 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500 as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.