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- S&P 500 futures dropped over 1% after US and Israeli strikes on Iran heightened geopolitical risk and market anxiety.
- Joint US-Israeli strikes killed Iran’s Supreme Leader Ayatollah Ali Khamenei, marking a major escalation in the Middle East.
- Escalation sent Oil prices soaring and lifted Gold as investors sought safety.
S&P 500 futures slid more than 1% to 6,820 during Asian trading hours, ahead of the US regular session open. Equity futures came under pressure after the United States (US) and Israel carried out coordinated strikes on Iran over the weekend, heightening risk aversion.
The joint US-Israeli operation reportedly killed Supreme Leader Ayatollah Ali Khamenei, marking a pivotal moment for the Islamic Republic and one of its most significant developments since 1979. President Donald Trump said US military operations in Iran are “ahead of schedule,” according to CNBC.
The large-scale assault was launched overnight Saturday after Iran rejected US demands to scale back its nuclear program. Iranian officials have pledged a strong retaliation, intensifying fears that the conflict could broaden across the region.
The escalation drove Oil prices sharply higher and added fresh instability in the Middle East to an already growing list of concerns for equity investors. Gold futures also rallied as investors flocked to the traditional safe-haven asset.
West Texas Intermediate (WTI) Oil price edges lower after opening at a gap up, trading around $71.50 at the time of writing. Oil prices rose as the Iranian Islamic Revolutionary Guard Corps (IRGC) Navy announced the stoppage of shipments through the Strait of Hormuz. More than 20% of global oil is moved through the Strait of Hormuz. Iran is the fourth-largest producer in OPEC.
S&P 500 FAQs
The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.
Companies are selected by committee, unlike some other indexes where they are included based on set rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, length of time publicly traded, and representation of the industries in the economy of the United States. The nine largest companies in the index account for 27.8% of the market capitalization of the index.
There are a number of ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFD) to place bets on the direction of the price. In addition, that can buy into Index, Mutual and Exchange Traded Funds (ETF) that track the price of the S&P 500. The most liquid of the ETFs is State Street Corporation’s SPY. The Chicago Mercantile Exchange (CME) offers futures contracts in the index and the Chicago Board of Options (CMOE) offers options as well as ETFs, inverse ETFs and leveraged ETFs.
Many different factors drive the S&P 500 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500 as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.







