Stock Market This Week: Top Three Catalysts for S&P 500 and Dow Jones

The stock market has remained highly volatile in recent weeks as investors assess the ongoing US-Iran conflict, rapid developments in the artificial intelligence (AI) industry, and a busy corporate earnings season.

This article explores the three biggest catalysts likely to drive the S&P 500 and Dow Jones indices this week.

S&P 500 and Dow Jones to React to Corporate Earnings The S&P 500 and Dow Jones indices have reacted mildly to the ongoing earnings season.

FactSet (NYSE: FDS ) data shows that 61% of all companies in the S&P 500 Index have released their results, with the blended earnings growth being a whopping 47.4%.

Most companies in the Magnificent 7 group have published their earnings, with many of them having strong numbers.

Looking ahead, hundreds more companies, including Berkshire Hathaway, Eli Lilly, Palantir Technologies, Advanced Micro Devices (NASDAQ: AMD ), Caterpillar, and Disney, will release their numbers.

Most of these companies are expected to report another quarter of strong financial results, extending the upbeat earnings trend seen across corporate America.

For example, analysts expect Palantir’s revenue to rise 80% year over year to $1.8 billion, while AMD’s revenue is projected to increase 47% to $11.3 billion.

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The perpetual futures market points to a higher open after President Donald Trump announced that he would halt the planned attack on Iran.

He cited interventions by Iran itself and other US allies in the region.

A sustained period of calm would likely push oil prices lower while providing a tailwind for the stock market.

Lower energy prices would help ease inflationary pressures, reducing the likelihood that the Federal Reserve will need to raise interest rates later this year.

These events are happening because of the ongoing performance of the bond market, where the 30-year yields have jumped to the highest level in years.

US Nonfarm Payrolls Data The US stock market will also react to the upcoming US nonfarm payroll data that comes out on Friday.

Economists expect data to show that the economy added 88k jobs in July after adding 57k jobs in June.

The unemployment rate is expected to remain unchanged at 4.2%, while the participation rate is expected to remain at 61.5%.

These jobs numbers are particularly important because they come after the Fed left interest rates unchanged, with three officials voting to hike.

A Polymarket poll shows that odds of a rate hike happening this year are over 68%.

The stock market will also react to the ongoing volatility in the AI space, where companies like SK Hynix, Samsung, and Micron have been highly volatile.

Also, traders will likely react to the intervention by the US and the Bank of Japan (BoJ) to save the plummeting yen.

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