The Dow Jones, Nasdaq 100, and S&P 500 indices have moved sideways in the past few weeks as the recent momentum stalled. The S&P 500 Index is stuck at $6,000, its highest point since February 24, and 24% above its lowest point this year.
Similarly, the Nasdaq 100 Index has moved to $21,800, up by 31% from its lowest point this year. The Dow Jones Index traded at $42,765, up by 16% from the YTD low. This article looks at the top 3 catalysts for these indices this week.
US and China trade talks
The main catalyst for the three indices is the upcoming trade talks between the US and China in London. This meeting was scheduled during a phone call between Donald Trump and Xi Jinping of China last week.
It comes a few weeks after the two sides met in Switzerland and reached a few important agreements. For example, they agreed to lower tariffs from triple digits to double digits.
Recently, however, China and the US have accused each other of not fulfilling the agreement. China accuses the US of provocations, including suspending students from its universities and export controls on chips.
The US has accused China of continuing to block shipments of rare earth products that are used in the manufacturing process.
Therefore, the Dow Jones, S&P 500, and Nasdaq 100 indices will react to any meeting outcome. They will likely surge if the two sides make progress and potentially a meeting between the two presidents.
Such progress would be notable because the US and China are some of the biggest trading partners in the world.
However, there are signs that China is pivoting its business away from the US, which has become more confrontational. For example, its airlines are no longer buying Boeing jets, and are now planning to order 500 jets from Airbus.
US inflation data
The next key catalyst for the Dow Jones, Nasdaq 100, and S&P 500 indices is the upcoming US inflation data on Wednesday.
Economists expect the data to show that inflation rose a bit, with the headline consumer price index (CPI) rising to 2.5% and the core CPI metric moving to 2.8%.
Signs that inflation is rising will be bearish for the stock market as it will signal that the Federal Reserve will maintain a hawkish tone for a while. This will, in turn, infuriate Donald Trump, who called for a “full point” cut, arguing that the ECB has slashed interest rates ten times.
US stocks do well when the Federal Reserve is cutting interest rates or when it signals that it will do that. The CPI data comes after the US jobs data pointed to a strong economy.
Corporate earnings, Trump and Musk relations, and BBB
The other minor catalysts for the three US indices will be some corporate earnings, Trump and Elon Musk relations, and the Big Beautiful Bill. The only notable companies that will release their earnings are Adobe, Oracle, Chewy, GameStop, J.M Smucker, Stitch Fix, and Core & Main.
Stocks will also react to the ongoing Trump and Musk relations, which hit a record low last week. Musk has pushed harder for Republicans to vote against the Big Beautiful Bill that ends EV mandates and increases government debt.
Elon Musk has a lot to lose as his companies have billions of dollars in government contracts. Therefore, there is a likelihood that he will want to make peace. A deal between the two will be good for the stock market
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