The S&P 500 closed at a record high for the first time in over two years, marking a significant milestone for the stock market. The large-cap benchmark reached 4,839.81 points on Friday, surpassing the previous record set on January 3, 2022. This move ended a 512-day streak without a new closing high for the index, marking the longest such period since 2013.
Analysts have attributed the recent stock market volatility to a renewed rise in U.S. Treasury yields and uncertainty surrounding the Federal Reserve’s March interest rate cut. While the market initially showed a downward trend at the beginning of the year, strong economic data and Federal Reserve officials’ stance on interest rates have turned expectations around.
On the day the record was broken, chipmaker Taiwan Semiconductor Manufacturing Co.’s optimistic outlook for 2024 helped drive the outperformance of mega-cap technology stocks, leading to a steady rebound in the S&P 500 and Nasdaq Composite Index.
Despite the record high, some experts see growing technical evidence suggesting a potential pullback or correction in the market. For example, the VIX term structure, which compares one-month and three-month futures of the Cboe Volatility Index, indicates expectations for future implied volatility in the S&P 500. This has led to concerns of market complacency that may lead to future trouble.
However, historical data suggests that returning to record territory after a gap of at least a year often results in positive returns one year later, supporting the bullish sentiment.
Following the record high for the S&P 500, U.S. stocks exhibited strong performance on Friday, with the Dow Jones and Nasdaq Composite also posting gains. The Dow Jones rose nearly 400 points, or 1.1%, to close at a record high of 37,863.80 for the second time this year, while the Nasdaq Composite saw a 1.7% increase.
Overall, the outlook for the stock market remains optimistic, and the S&P 500’s record high is expected to bring more investors into the market as optimism for AI and fourth-quarter earnings outweigh concerns about the pace of future interest rate cuts by the Federal Reserve.