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What to Watch Out for As S&P 500 Index Companies Report

The S&P 500 index is one of the biggest and most influential stock market indexes in the world. It was formed in 1957 by Standard & Poors to track the 500 biggest companies listed in the New York Stock Exchange (NYSE) and Nasdaq. By looking at the biggest companies in the US, the S&P is used as a good indicator of the performance of the US economy. The index opened to trade at $387. Today, the index has grown to reach above $3,000, which is a 675% increase.

Yesterday, the S&P 500 index rose slightly as investors waited for results from most of the biggest companies in the United States. These results will come a week after about 15% of all companies in the index released their results. Last week, results from the five biggest banks in the US showed that they netted a record $30 billion in profits in the second quarter.

Today, a number of companies in the S&P 500 index will release. Some of the companies that will report are 3M, Avangrid, Biogen, Centene, Corning, Fifth Third, Harley-Davidson, Illumina, iRobot, Keycorp, Kimberly-Clark, Lockheed Martin, Navient, PACCAR, PulteGroup, Snap, Texas Instruments, TransUnion, United Technologies, Verizon, and Xerox.

Investors will pay attention to various things in the today’s earnings. First, they will want to hear more from United Technologies, which recently announced plans to merge with Raytheon. On 3M, they will want to know whether the company has done enough to return to growth. This is after the company announced a weak quarter in the previous earnings call. The company is also a good indicator of the ongoing trade war. On Harley-Davidson, they will want to know how the company is changing to attract the millennials.

Second, they will focus on Snap, which is a leading millennial-focused social media company. They will want to know whether the company is continuing to add more daily and monthly active users. This year, Snap is one of the best-performing technology stocks.

Third, they will use PulteGroup’s earnings as an indication of the US housing market. Pulte is one of the biggest homebuilding companies in the US. Its results will come shortly before the US releases the official existing home sales. 

Ahead of these earnings, the S&P 500 rose slightly to a high of $2992. This is shortly after the index crossed the $3,000 milestone less than two weeks ago. On the chart below, the index is trading above the 14-day and 28-day moving averages. The Average Directional Index has moved lower while the RSI has moved slightly lower from the overbought level. There is a likelihood that the index will trade above the $3,000 level if the corporate earnings are good. If the earnings disappoint, the index 78.6% Fibonacci Retracement may level of $2900.

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