The Nasdaq Composite and S&P 500 are trading near their all-time highs, with the Nasdaq-100 around 26,400 and the S&P 500 near 7,711. Investors are watching several catalysts this week that could determine the next leg for these benchmarks.
Geopolitical risk: US-Iran tensions escalate
US-Iran tensions have escalated after the US struck Iranian launchers near the Strait of Hormuz. This marks the first such attack since the recent ceasefire, and Iran is expected to retaliate against US targets in the region. The situation is particularly delicate because US military ammunition levels are reportedly low, which could limit the scope of any response.
Oil prices have already reacted, with Brent and WTI climbing to $90 and $85 per barrel, respectively. Gasoline prices remain above $4 a gallon, and diesel has hit multi-year highs. Higher energy costs feed into inflation, which remains stubbornly above 3% as measured by the core PCE price index for May.
If inflation stays elevated, the Federal Reserve may be forced to raise interest rates again. In a recent speech at Jackson Hole, Fed Governor Kevin Warsh reiterated that the central bank is prepared to use all available tools to bring inflation down.
Labor market data in focus
The most significant economic release this week is the nonfarm payrolls report due Friday. Economists expect the US economy to have added 84,000 jobs in August, a rebound from the 23,000 decline in July. A stronger-than-expected number would increase the odds of another rate hike.
Before that, the JOLTS job openings report will be released on Tuesday, followed by ADP's private payrolls data. Additionally, the ISM manufacturing and services PMIs will provide a snapshot of business conditions across the economy.
Earnings from tech heavyweights
Corporate earnings will also move the indices. Broadcom, a key supplier to AI companies like OpenAI, reports on Tuesday. Oracle, another major player in AI infrastructure, will also release results, with investors watching for continued growth and any updates on its rising debt load.
Other notable names reporting this week include Dell, Palo Alto Networks, Medtronic, Credo Technology, Snowflake, HP Enterprise, Ciena, and Zscaler. These results cap a strong earnings season, with overall S&P 500 earnings growth running at about 50% year-over-year.
For context on recent market moves, see our coverage of Nvidia's strong forecast fueling a tech rally and how Iran sanctions and Nvidia earnings weighed on futures.
Investors will also be watching for any spillover from the crypto market's recent moves and oil's climb on Mideast tensions.
This article is for informational purposes only and does not constitute financial advice.
