The S&P 500 on Wednesday was a point short of hitting 5,000 – a milstone that once seemed unreachable at the depths of the Covid sell-off.
Blockbuster profits from the likes of Amazon, Meta, Nvidia, and Chipotle in recent days have helped convince insvestors that the US has avoided a recession – and Americans are ready to spend.
The closely-watched index – tracks the performance of the 500 largest public companies in the US – is the backbone of most American’s investment portfolios, including retirement 401(k)s and IRAs.
CVS, Disney and Uber all beat expectations today too, and saw stock prices rise.
‘It’s earnings driven, but it’s bleeding over into other companies that may not have announced,’ said Kim Forrest, Bokeh Capital’s chief investment officer, of Wednesday’s moves, as reported by CNBC.
The S&P 500 on Wednesday hit a record high of 5,000. Pictured is a trader at the New York Stock Exchange dribbling a basketball
‘They’re getting swept on the coattails. Some of what we’re experiencing this year is people don’t want to be left behind like they were last year.’
The index is weighted by company size, meaning changes to the price of shares in the largest companies can move the index significantly.
The ongoing rally that brought the S&P to the 5,000 level started in late October, when the expectation that high interest rates may finally come down caused the price of government bonds to rise.
Growth was driven by a group of technology stocks known as the ‘Magnificent Seven’ – many of which boomed last year thanks to hype around AI. They include Apple, Amazon, Microsoft and notably the chip maker NVIDIA.
And this year, overall strong earnings for corporate America have been paired with continued expectations that the Federal Reserve is will indeed finally reduce benchmark interest rates.
Doing so would reduce the high cost of borrowing American consumers and companies currently face, injecting the economy with more money and poising it for further growth.