S&P 500 Achieves New Milestone, Closes Above 5,000 on Wall Street
The U.S. stock market continues its winning streak as the S&P 500 closes above 5,000 for the first time in history. This milestone marks the 10th record in less than a month for the index, solidifying its upward trajectory. The Nasdaq composite also experienced gains, coming within 0.4 percent of its all-time high set in 2021. However, the Dow Jones Industrial Average lagged behind, slipping by 0.1 percent after setting its own record.
While milestones like the S&P 500 reaching 5,000 may not hold significant weight in terms of hard numbers such as interest rates or profits, they can fuel market enthusiasm. Wall Street’s rally began with hopes of decreasing inflation leading to interest rate cuts by the Federal Reserve. However, reports indicating a strong economy have delayed these cuts. The market has responded positively to the strength of the economy by raising expectations for company profits, bolstering stock prices.
Big Tech stocks played a significant role in driving the market’s gains, particularly those associated with artificial intelligence technology. Companies such as Nvidia, Microsoft, and Amazon experienced notable increases, contributing to the overall rise of the S&P 500. On the other hand, PepsiCo faced a 3.6 percent drop in revenue for the latest quarter, attributing it to customers returning to pre-pandemic behaviors. Expedia also experienced a significant decline of 17.8 percent despite reporting stronger profits than expected. The company’s forecasts for the first quarter of 2024 raised concerns about slower growth in bookings.
In terms of overall performance, the S&P 500 closed at 5,026.61, gaining 28.70 points. The Dow Jones slipped by 54.64 to reach 38,671.69, while the Nasdaq increased by 196.95 points to finish at 15,990.66.
During this reporting season, profits for major companies in the S&P 500 have generally exceeded expectations. This trend has contributed to rising optimism on Wall Street. However, some contrarians argue that this optimism may have driven stock prices to unsustainable levels.
Traders have been investing in riskier assets at a rapid pace, leading Bank of America’s contrarian measure to lean more towards “sell” than “buy.” This measure tracks market sentiment and indicates that fear has diminished since October when it was at a convincing high.
In the bond market, there has been a slight increase in Treasury yields. The yield on the 10-year Treasury rose from 4.15 percent to 4.16 percent. Notably, these movements have been calmer compared to earlier in the month when traders adjusted their rate cut forecasts.
Overall, the stock market’s ability to reach new highs despite diminishing expectations for rate cuts is seen as a positive sign. However, investors are cautioned against becoming complacent during the ongoing bull run.
In global markets, indexes were mostly lower, with several Asian markets closed for the Lunar New Year holiday. Tokyo’s Nikkei 225 experienced a slight increase of 0.1 percent after reaching a 34-year high earlier in the day.
The S&P 500’s achievement of closing above 5,000 marks another significant milestone for the U.S. stock market. As investors navigate through a fluctuating landscape and weigh economic indicators, the market’s resilience and ability to surpass expectations remain key factors in its continued success.
By Stan Choe
