Timely & Relevant News: The S&P 500 Hits New Record Highs

2/16/24 - The stock market experienced solid gains last week, concluding the trading week on a positive note, thanks to robust corporate reports and favorable inflation news. This momentum propelled the S&P 500 Index into a new record high.

S&P 500 Tops 5,000

At the start of last week's trading, stocks faced downward pressure due to comments by Fed Chair Powell over the weekend, signaling that the Federal Reserve had no immediate plans to initiate interest rate cuts. Consequently, the yield on the two-year U.S. Treasury note, highly influenced by monetary policy, increased to its highest level in two months.1

By the end of trading on Monday, February 5th, stocks had regained a significant portion of their previous losses. Influencing this market rally were positive corporate earnings reports. This trend continued throughout the week, contributing to the overall market momentum. By Friday, 67% of the companies listed in the S&P 500 had released their Q4 results, and an impressive 77% of those companies exceeded earnings expectations.2

Investors expressed enthusiasm last Friday after a report indicated December's inflation was lower than initially anticipated. This positive news revitalized buying activity, resulting in the S&P 500 surpassing 5,000 for the first time.3

Source: YCharts.com, February 10, 2024. Weekly performance is measured from Monday, February 5, to Friday, February 9. ROC 5 = the rate of change in the index for the previous 5 trading days. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.

Economic Strength

The strength of the U.S. economy has come into the spotlight. An analysis conducted by The Wall Street Journal recently proposed that the economy's resilience could be attributed - at least in part - to the productivity driven by the technology sector.4

What might rein in that productivity? One possible influence could be the increase in oil prices witnessed last week. Additionally, shipping companies have been imposing surcharges for several months to mitigate recent conflict, and these charges may contribute to global inflation this year, potentially dampening investor enthusiasm.5

Our Covenant Wealth Strategies' Investment Team is taking an optimistic stance based on a variety of positive signals and indicators, while exercising caution as appropriate to make wise and appropriate investment decisions. Additionally, we encourage you to read our other recent communication - 10 Things You Should Know About A Bull Market.

If you have specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up time to discuss further.

Disclosures: 

All investing involves risk, including loss of principal. Indexes are not investments, do not incur fee and expenses and are not professionally managed. It is not possible to invest directly in an index.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor. The charts above are for illustrative purposes only.

S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks. Diversification does not ensure a profit or protect against a loss in declining market. This material is provided for educational purposes only.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

Footnotes

1. The Wall Street Journal, February 4, 2024

2. FactSet.com, February 9, 2024

3. CNBC.com, February 9, 2024

4. WSJ.com, February 8, 2024

5. CNBC, February 9, 2024

6. IRS.gov, March 8, 2023

7. Fastcompany.com, October 9, 2023