S&P 500 closes at record high – in more good news for 401(K)s – just short of key 5,000 milestone
- The S&P 500 nearly reached the 5,000 milestone for the first time on February 7
- Confidence is growing that the Federal Reserve will cut interest rates to record levels
The S&P 500 fell just shy of 5,000 on Wednesday β a milestone that once seemed unattainable at the depths of the Covid sell-off.
Blockbuster profits from companies like Amazon, Meta, NVIDIA and Chipotle in recent days have helped convince investors that the U.S. has avoided a recession and that Americans are willing to spend.
The closely watched index tracks the performance of the 500 largest publicly traded companies in the U.S. and is the backbone of most U.S. investment portfolios, including retirement 401(k)s and IRAs.
CVS, Disney and Uber all also exceeded expectations today and saw their share prices rise.
βIt’s profit-driven, but it’s spilling over to other companies that may not have announced it yet,β Kim Forrest, Bokeh Capital’s chief investment officer, said of Wednesday’s moves. CNBC.
The S&P 500 nearly reached an all-time high of 5,000 points. Pictured is a trader on the New York Stock Exchange dribbling a basketball
‘They are being swept by their tails. Part of what we are experiencing this year is that people don’t want to be left behind like they were last year,β he added.
The index is weighted by company size, which means that changes in the price of shares in the largest companies can significantly affect the index.
The sustained rally that took the S&P to the 5,000 level began in late October, when expectations that high interest rates might finally fall pushed up the price of government bonds.
The growth was driven by a group of technology stocks known as the ‘Magnificent Seven’, many of which soared last year on the hype surrounding AI. These include Apple, Amazon, Microsoft and especially the chip maker NVIDIA.
And this year, overall strong gains for corporate America have been accompanied by continued expectations that the Federal Reserve would indeed finally cut interest rates.
This would reduce the high cost of borrowing that American consumers and businesses currently face, injecting more money into the economy and positioning it for further growth.