- On February 8, the S&P 500 finally reached the 5,000 milestone for the first time
- Investors on Wall Street are looking promising as they dig into the earnings of U.S. companies
- Confidence is growing that the Federal Reserve will cut interest rates to record levels
The S&P 500 reached an all-time high of 5,000 points near the end of trading on Thursday and fell just before closing.
The quarterly figures convince investors that American business will grow.
It is the first time this milestone level has ever been surpassed by the benchmark index, which tracks the performance of the 500 largest publicly traded companies in the US.
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.
The S&P 500 reached a record high of 5,000 points on Wednesday. Pictured is a trader on the New York Stock Exchange dribbling a basketball
“It’ll be a good headline, but in perspective it’s another stop on this ridiculous rally that we’ve been seeing,” said Jay Woods, chief strategist at Freedom Capital Markets, as reported by CNBC.
“I think the market is tiring, this rally is tiring.”
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.
Major companies reported big profits this week.
Walt Disney Co. rose 12.9 percent after reporting stronger earnings for the latest quarter than analysts expected. It benefited from cost savings and growth in its theme parks.
Ralph Lauren was another winner, rising 16.7 percent after earnings and revenue exceeded Wall Street expectations. It said it saw strong holiday sales around the world, led by Asia.
U.S.-listed shares of Arm Holdings, a British-based semiconductor company, rose 59 percent after it also beat analyst expectations.