3 Things to Watch This Week That Could Heavily Impact How the S&P 500 Does From Here on Out

This past week was a busy one for the markets with the latest inflation numbers coming out and, of course, the big SpaceX IPO coming on Friday. Thus far, the stock market has continued to do well in 2026, with the S&P 500 (SNPINDEX: ^GSPC)'s gains sitting at around 9% as of June 12. It's particularly impressive given how well the index has been doing in recent years. Since 2023, it has risen by 94%.

How the remainder of the year goes, however, could depend on multiple factors. There are three things to watch for this week that could be good indicators of how the market will perform in the weeks and months ahead.

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1. How SpaceX stock performs in its first full week

Although SpaceX had a successful first day, rising by 19%, how it performs the remainder of the year is a big question. Its valuation is north of $2.1 trillion, already making it among the most valuable companies in the world.

The big question this week is whether that valuation will weigh on the stock or whether momentum will remain strong. While SpaceX gives investors the ability to pursue growth opportunities in many areas, including rockets, artificial intelligence, and telecommunications, it's also highly unprofitable. If the stock thrives this week, that could indicate that investor appetite for risk remains high.

I thought that SpaceX's IPO might have called into question high valuations, potentially negatively impacting the markets, but that hasn't been the case, at least not on day one. After a full week, there will be a clearer indication of just how strong the appetite for risk really is and how willing investors are to look past sky-high valuations.

2. The upcoming Fed meeting

The Federal Reserve will announce its interest rate decision this week under new Fed chair Kevin Warsh. It'll be a highly anticipated event because it will provide valuable insights into how hawkish or dovish Warsh is and whether rates will likely rise or fall this year.

With inflation rising to its highest levels since 2023, according to the most recent numbers, it certainly doesn't make the case for lowering interest rates easy, which the U.S. president has been pushing for. What may be even more important than the actual rate decision is what Warsh says about the economy and if there's any indication of what the future might hold.

If there are hints that interest rates could come down this year, that might be the fuel that sends SpaceX and other speculative investments higher. If, however, there are signs that rates may not be coming down, that could curb investments and negatively impact the S&P 500.

3. If there's a peace deal between the U.S. and Iran

What may be the most important issue is what happens with Iran, and if the U.S. reaches a deal that leads to the opening of the Strait of Hormuz. On Friday, there were reports that a deal might happen very soon and that potentially something might be signed this weekend. But there have been reports such as this in the past, and the situation has remained volatile and uncertain.

If, however, this time the deal proves to be real and there is an end in sight to the conflict, that may be great news for the market. It could have a positive impact on lowering oil prices, bringing down inflation, and also strengthening the case for interest rates to come down. That, in turn, could also lead to greater speculation and trading from retail investors. Thus, this may be the single most important development to monitor, as it can have far-ranging effects on the overall stock market.

^SPX data by YCharts

Why long-term investors don't need to worry

The good news for long-term investors, however, is that if you have a long investing horizon, it can still be an excellent idea to invest in S&P 500 index funds. Billionaire investor Warren Buffett has invested in the market for decades and famously doesn't worry about economic forecasts and short-term developments. It's a reminder of why investing for the long term is still a great option, regardless of what happens in the short run.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.