Daily Management Review

S&P 500 Rises To An All-Time High, Signalling A Market Recovery


S&P 500 Rises To An All-Time High, Signalling A Market Recovery
Tech stocks and improving economic sentiment drove US stock prices to all-time highs on Friday. The S&P 500 index, which measures the stocks of the largest corporations in America, closed the day at 4,839.8, up 1.2% from the previous high set in January 2022.
It has rebounded from the fall it experienced two years ago, as seen by the new high. Markets were then concerned about inflation and the impact on the economy.
As inflation has decreased and the likelihood of an economic crisis has decreased, investors have resumed buying equities. As confident investors snapped up shares, the Dow Jones Industrial Average, which monitors companies deemed to be indicative of the economy, recovered to hit its own record late last year.
With a 1% daily increase, it set yet another record high on Friday.
Despite a 1.7% increase, the Nasdaq, which lists a large number of tech companies, is still roughly 4% behind its top from 2021.
With equities having recovered 35% from the October 2022 bottom, Wall Street views the new S&P record as unmistakably defining the current phase of rising share prices, or a bull market.
The expectation that the US central bank, which hiked interest rates significantly in 2022 in an effort to slow price hikes and cool the economy, is almost ready to declare triumph and perhaps start reversing course later this year has encouraged investors.
This would aid businesses by lowering borrowing rates and improving the economy.
Rate reductions would also encourage investors to shift their portfolios from fixed-income securities to shares, which would drive up prices even more.
The expectation that fresh developments in artificial intelligence will spur growth has also buoyed tech companies.
Public perception is also improving as retirement and investment accounts have rebounded, petrol prices have decreased, and other item price hikes have abated.
According to the University of Michigan's monthly consumer survey, which is a carefully watched indicator of mood, sentiment this month reached its highest point since 2021 and increased by more than 21% from the previous year on Friday.
"Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations," the survey said.
"Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended."