Mixed Trading for US Stock Index Futures, Nasdaq Seeks Recovery

US stock index futures are trading with mixed signals as the week comes to a close, with Nasdaq futures showing signs of a potential rebound after a lackluster performance on Thursday. S&P 500 futures are up by 0.13%, while Dow Jones futures have dipped by 0.11%, and Nasdaq futures have gained by 0.51%.

In Thursday’s trading session, the S&P 500 index saw a gain of 0.58%, the Dow Jones index rose by 0.91%, and the Nasdaq index increased by 0.30%. The Energy Sector emerged as the top performer within the S&P 500, posting a gain of nearly 2.5%, followed closely by the Real Estate Sector, which saw a rise of 2.36%.

However, the Technology Sector experienced a decline of 0.44%, marking it as the worst-performing sector of the S&P 500. Zebra Technologies Corp. recorded a notable gain of 12.17%, while West Pharmaceutical Services Inc. faced a decline of over 14%.

Looking ahead, investors are awaiting the release of Producer Price Index (PPI) figures for January by the Bureau of Labor Statistics (BLS). Retail Sales in the US saw a decline of 0.8% in January, falling short of market expectations, while first-time unemployment benefit applications decreased to 212,000.

Inflation in the US, as measured by the Consumer Price Index (CPI), softened to 3.1% year-on-year in January. Coinbase Global Inc. reported earnings of $1.04 per share in the fourth quarter, marking its first quarterly profit since 2021, attributed to strong trading volumes. Coca-Cola Co. and Airbnb Inc. also reported positive financial results, while Cisco Systems Inc. announced plans for job cuts and strategic focus areas.

The S&P 500 index represents the performance of 500 publicly owned companies and is considered a broad measure of the US stock market. It has delivered impressive returns over the years, with an average annual return of 11.9% since its inception in 1957.

S&P and Nasdaq futures are presented by CME e-minis and Dow Jones futures are presented by CBOT e-mini.

S&P 500 FAQS

What is the S&P 500?

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%.

How are companies chosen to be included in the S&P 500?

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.

How can I trade the S&P 500?

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.

What factors drive the S&P 500?

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.

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