A ‘massive make-or-break moment’ has arrived for the S&P 500

In the United States, the S&P 500, or the abbreviation of the Standard and Poor's 500, is a stock market index that tracks 500 publicly traded domestic companies. It is considered by many investors to be the best overall measurement of American stock market performance.

According to Investopedia, The S&P 500 is one of the most widely followed proxies for the U.S. stock market. It's a bellwether and benchmark for many significant funds and portfolio managers. From 1950 to 2021, the S&P 500 yielded an annualized average return of 11.53%. The companies listed on the S&P 500 represent a who's who of the U.S. industry, and additions and deletions from the list often indicate market trends. Some of the top-weighted companies in the index include General Electric Company, Microsoft Corporation, Citigroup Inc., and Exxon Mobil Corporation.

On October 11, 2022, CNBC reported that the S&P 500 slipped 0.65% to close at 3,588.84 after rebounding from a multiyear low earlier in the session. This rate is close to its all-time low in mid-June at 1.7%.

Many markets and stock watchers have opinions and analyses about whether the U.S. will fall into another recession because of inflation. But the question is, "is it a massive make-or-break moment for the S&P 500 to arrive?"

Brad McMillan, a chief investment officer for Commonwealth Financial Network, predicted earnings growth for the S&P 500′s third quarter between 6% and 7%.

He made this prediction because, as he said, the "economy isn't as bad as expected" with a strong labor market and rebounding consumer spending. However, the impacts of inflation are evident in the foreign exchange rates and from the worker shortage in companies in the index.

Furthermore, Brad McMillan continued, "All of these will weigh on earnings, although likely not as much as currently estimated," McMillan said. "We will get a win here, but probably not that big of a win."

"The FactSet estimate would make for the lowest period of growth since the third quarter of 2020 when it contracted 5.7%," he said.

"This is a very healthy growth rate, given current conditions, and should help act as a cushion for markets going forward," he said of his 6% to 7% estimate. "It is not the growth we have gotten used to, but slow growth is better than no growth."

Therefore, even though the S&P 500 has had a rough start this year and continues to drop over this year, there are still high hopes of its "making moment." Even though it wouldn't be that massive, an increased rate is still better than nothing.

Footnote:

Investopedia | "An Introduction to U.S. Stock Market Indexes" | March 22, 2022, | Accessed October 13, 2022.

https://www.investopedia.com/insights/introduction-to-stock-market-indices/

S&P 500 | stock market | Britannica

https://www.britannica.com/topic/SandP-500