On Friday, the S&P 500 achieved a new record high, buoyed by technology companies such as Meta (NASDAQ: META), whose quarterly results surpassed expectations.
February 8 was characterized by market volatility, as the S&P 500 index briefly reached a significant milestone of 5000 points, prompting investor reactions to a mix of earnings reports, a stable jobs report, and indications from policymakers regarding potential interest rate adjustments.
Beneath the surface, small-cap indexes exhibited more robust performance than large caps, while semiconductor stocks also demonstrated outperformance. Specifically, shares of chip designer ARM Holdings surged by 47% following its forecast of robust demand for designs associated with artificial intelligence.
Picks for you
Catalysts for surge
While the feat is impressive, mentioning the factors that have driven this surge and a record-breaking session is essential.
On the economic data front, there was a greater-than-anticipated decline in the number of Americans filing new claims for unemployment benefits last week, indicating a robust underlying strength in the labor market.
Despite modest gains, the S&P 500 achieved a record high for the second consecutive day as investors diverted their attention from uncertainty regarding the timing of interest rate cuts and concerns surrounding the stability of certain regional banks.
Can the S&P 500 reach 6000?
While the question might seem far-fetched as the index just recently scraped the surface of the 5,000 threshold, some experts with arguments might think so, or if not 2024, then 2025.
The upcoming election day on November 5, 2024, is poised to influence the future of U.S. markets significantly. Typically, such events carry substantial weight, as historical trends suggest that new presidents often prioritize bolstering the market during their initial two years in office to enhance their prospects for reelection, according to market analyst Clem Chambers.
The possibility of Trump returning to office and the economy’s potential downturn is causing concern among investors and the broader markets.
Chambers notes a preference for keeping the current president in office for another term despite investors having limited direct influence over political outcomes.
However, the performance of the markets can act as an indirect statement. Should the market’s positive trend continue, reaching a new record threshold of 6000 could set another milestone for this year and serve as a compelling argument in favor of the incumbent’s policies.
Ed Yardeni might not think it’s plausible for the S&P 500 to reach 6000 this year, but the next one could achieve that threshold very well. Yardeni asserts that reaching 5400 for the S&P 500 by the close of 2024 is “achievable” and has now set a target of 6000 by the end of 2025.
This equates to annual earnings of $300 per share based on a price-to-earnings multiple of 20. Such projections imply a 14% annual growth rate over the next two years, surpassing the targets set by most Wall Street firms.
