S&P500 index: Correction so far under control?

The top 10 stocks of the S & P500 include five major technology stocks (Apple, Amazon, Microsoft, Alphabet and Facebook), but also larger, more classic and iconic American companies such as JP Morgan or Exxon Mobil.

The main benefit of this index is its depth, which allows it to be a good proxy for the US economy, with a sector weighting that favors the growth sectors a little more, just like the technology stocks that represent about 20% of the weighting.

Financial stocks account for just over 13% of the index and energy stocks around 5% are well balanced by defensive sectors such as health (around 15%) and consumer discretionary (10%).

After a 19.4% rise in 2017, the S & P500 posted a 6.2% drop in 2018 due to expectations of an economic downturn related to the worsening trade war between the US and China and a at the same time, interest rate increases by the FED.

The index rebounded 14% in 2019 due to a change of course of the FED which no longer plans to raise rates in the short term, and business results that were rather reassuring in the first quarter coupled with reasonable growth prospects in 2019.

However, the reactivation of the trade war with China raises the risks on the global economy, while the FED could be more accommodating.

The S&P500 is fairly valued at 18x ​​earnings, leaving little room for growth for expected earnings growth of +5% this year.

Instruments: SPY (SPDR in USD), SP5 (Lyxor in Euro), IVV (iShares, in USD)