The S&P 500 Index has staged a phoenix-like recovery this month as it surged to a record high. It has soared by nearly 30% from its lowest point in April, meaning that it is in a bull market. This article explores the top catalysts for the VOO and SPY ETFs this week.
Donald Trump’s trade war
The first main catalyst for the VOO and SPY ETFs is the ongoing trade war between the United States and other countries now that a key deadline is nearing.
On the positive side, there are signs that the US will reach deals with other countries. For example, there are signs that the US will restart its trade talks with Canada after the country scraped its taxes on US technology companies.
The decision came two days after Donald Trump ended the talks, citing the tax, which was to take effect soon.
Further, the US signed a deal with China, and officials are anticipating at least ten announcements soon. This could include major deals by trading partners like the European Union, Japan, and South Korea.
These trade deals will likely lead to a continuation of the SPY and VOO ETFs this week. On the other hand, some signs of disagreements will drag it lower.
US macroeconomic data
The other key catalyst for the SPY and VOO ETFs is the upcoming macroeconomic data that will provide more information about the economy.
The first key data to watch will come out on Tuesday when the S&P Global and the Institute of Supply Management (ISM) will publish the latest manufacturing PMI data.
It will be followed by Thursday’s nonfarm payrolls (NFP) data. This report will come out on Thursday because Friday will be a public holiday in the United States.
Economists expect the data to show that the unemployment rate remained unchanged at 4.2% in June as the economy created over 150k jobs.
These numbers are important because they influence the actions of the Federal Reserve. Signs that the labor market is deteriorating will lead to more hopes that the Fed will cut interest rates.
SPY and VOO to react to Trump’s Big Beautiful Bill
The other top catalyst for the VOO ETF is Donald Trump’s Big Beautiful Bill, which is being deliberated in Washington.
This bill will have pros and cons for the stock market. On the positive side, it contains tax cuts that will benefit most companies in the United States. It also has some notable deregulatory measures that will benefit firms in the energy sector.
Defense contractors like RTX and Lockheed Martin will also benefit from the bill because of the increased spending.
However, the bill will cut some incentives that will hurt companies in the clean energy industry and electric vehicles. It will also lead to a surge in public debt, which will put the US fiscal health at risk.
S&P 500 Index to move if Trump announces Fed nominee
A wildcard that may have an impact on the stock market is a decision by Donald Trump to undercut Jerome Powell by appointing his successor way much in advance. The potential names are Scott Bessent, Kevin Warsh, and Kevin Hassett.
Nominating the Fed Chair at this point could have a negative impact, which explains why the US dollar index has plunged. It will do that by affecting the Fed independence.
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