The latest news regarding the movement of the well-known S&P 500 index is unlikely to please investors. It is likely that in the next few days this index will change its direction and we will see a correction of around 10% in the next 3 to 6 months.[1] Futures on the S&P 500 index were slightly higher in pre-market trading on Tuesday. The decline is linked to the situation in the US, where a recession could occur in the second half of this year. The risk-reward ratio over the next six months is skewed to the downside.
Performance of S&P 500 during last 5 years. (Source: Investing)
Several factors could trigger a decline in equities, such as an aggressive monetary policy, potential capital problems catalysed by the banking crisis, or a consumer who is increasingly dependent on credit to sustain his spending.
The S&P 500 Index consists of 500 stocks of large U.S. companies in a variety of sectors, including technology, health care, financials and consumer goods. This diversity helps the index to be relatively stable and resilient to sudden market fluctuations. The companies included in the index are generally well-established and have a good track record of profitability, which can make the index a good indicator of the overall health of the U.S. economy. Overall, the S&P 500 Index is a widely used benchmark index of the U.S. stock market and provides investors with a snapshot of the performance of some of the country's largest and best-known companies.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
