The risk scenario

The S&P 500’s rally has stalled just shy of 2,500. Investors are drawn to to riskier assets such as equities when they expect further expansion in the economy. The S&P 500 (SPY), which comprises the 500 largest stocks in the United States, is a constituent of the Conference Board Leading Economic Index (or LEI). Risk-off developments such as the recent North Korean tensions and the exodus of key members of Trump’s business council could impact the S&P 500’s performance.

Could the S&P 500’s Stalled Ascent Derail Economic Expansion?

The S&P 500’s performance and effect on the LEI

After an impressive run in the last seven months, closing just one month negatively, the S&P 500 is headed for another negative close in August. Plagued by the ascent of risk aversion, US indexes have witnessed a sharp sell-off in recent weeks. Moving forward, political uncertainty surrounding the Trump presidency and the looming debt crisis could impact the S&P 500’s performance.

The S&P 500’s weight in the LEI is 0.04. The S&P 500’s net positive weight in the LEI’s July performance was 0.03 points, or 3%.

ETFs tracking the S&P 500

Major funds that track the performance of the S&P 500 include the SPDR S&P 500 ETF (SPY), the iShares Core S&P 500 ETF (IVV), the Vanguard S&P 500 ETF (VOO), and the PowerShares S&P 500 Low Volatility Portfolio ETF (SPDN). As uncertainty and risk aversion are expected to increase, funds such as the ProShares Short S&P 500 ETF (SH) and the ProShares Short QQQ ETF (PSQ) could witness an increase in demand.

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Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

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IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.

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