Chameleon 007
S&P 500 (SP500) Thursday up 0.62% To end at 4293.93 points, to close above a key level of 4292.44 points. He has a benchmark now rose more than 20% From the lowest closing level at 3577.03 points, it reached it October 12 last year, the technical definition of a bull market.
This year alone, the S&P 500 (SP500) has appeared rose +11%. Back in early January, investors were reeling from more than 19% loss In the 2022 benchmark index, weighed down by concerns about rising inflation, the Fed’s ultra-aggressive rate hike campaign, and macroeconomic and geopolitical conditions.
A number of factors have led the S&P 500 (SP500) to advance this year:
- Economic data showed the effects of the Fed’s interest rate increases – industrial and manufacturing activity has cooled, cracks are starting to show in the highly resilient labor market and inflation is starting to ease since it peaked last summer.
- Technology stocks have rebounded significantly after being shunned for much of 2022. Marquee names like FAANG members and Microsoft (MSFT) have been particularly popular, and they’ve helped their cause by reporting strong quarterly results. The recent fervor around artificial intelligence has also helped stocks of chipmakers and cybersecurity companies. The Nasdaq Composite (COMP.IND) and the Nasdaq 100 (NDX) both posted year-to-date returns. +26.5% And + 32.4%respectively.
- Traders have increasingly bet that the Fed will end its rate hike campaign this year and even considered the possibility of a rate cut, despite little or no signals from central bank spokespeople and Chairman Jerome Powell. According to the CME FedWatch tool, markets currently see a 74% chance of not raising rates at the Federal Reserve’s Monetary Policy Committee meeting next week.
Looking at the other side of the picture, many analysts, market commentators, and pundits have expressed concerns about the fact that much of the S&P 500’s (SP500) gains this year can be traced back to a limited number of heavyweight stocks. This asymmetry has been called unsustainable.
There were also concerns about the availability of liquidity in the market after the US government suspended its debt ceiling until 2025.
With plenty of economic data to come out this year, along with five central bank meetings scheduled, it remains to be seen if the S&P 500 (SP500)’s rally will continue or end.