How Will Improved US Consumer Confidence Impact the S&P 500 Index?
US Consumer Confidence Index
According to a report provided by the US Conference Board, the US Consumer Confidence Index improved strongly in August 2017. The index stood at 122.9 in August 2017 compared to 120.0 in July. It beat the market’s expectation of 104.0.
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The index reached a high of 124.9 in March 2017, but after that, the index fell both in April and May. The fall in the index in these two months showed that consumer activity had fallen in the United States (IWM). However, in the last three months, the index has been showing gradual improvement.
Despite the increasing geopolitical risk, consumer activity was at a marginally higher level in the economy (QQQ) (VFINX). The business conditions also improved in August. However, consumers’ short-term outlook on the economy is flat, mainly due to the tension between the US (VOO) and North Korea. Consumers are still optimistic about the long-term economic outlook.
Impact on the market
The consumer confidence index is one of the important drivers of the market. The S&P 500 Index (SPY) rose marginally in August 2017. Although consumer activity improved in the economy, the market showed some nervousness due to the rising tension between the US and North Korea.
If all the major economic indicators continue their upward trend, then we might see more upside in various index levels.
In the next part of this series, we’ll analyze the indicators that investors should watch this week.