New York – The S&P 500 made history by closing above the 5,000 level for the first time on Friday, reflecting a surge of optimism on Wall Street as investors welcomed encouraging data on inflation. This milestone comes during a period of robust economic growth, the rise of artificial intelligence, a better-than-expected earnings season, and anticipation of a shift in interest rates by the Federal Reserve.
After briefly surpassing 5,000 for the first time intraday on Thursday, the S&P 500’s journey to this historic level marks a significant achievement, taking almost 41 years to reach its first major milestone of 1,000 in 1998. The index reached its previous major milestone of 4,000 on April 1, 2021, following the Federal Reserve’s rate cuts, government stimulus efforts, and the optimism surrounding the Covid-19 vaccine and post-pandemic economic growth.
The index also hit a new record on January 19, 2024, closing at and surpassing its previous high of 4,796.56 from earlier in the year. The rise to new heights has been predominantly driven by a select group of companies, known as the “Magnificent Seven,” which includes Nvidia, Microsoft, Meta Platforms, Amazon, Apple, Alphabet, and Tesla. These companies have played a significant role in the S&P 500’s gains, with their shares reaching record levels several times over the past month.
While the S&P 500 is up about 5.4% so far in 2024, it’s worth noting that most of the index’s gains are attributed to the performance of these select companies. The resurgence of the stock market has been beneficial for these specific sectors and stocks, driving a majority of the index’s total return last year.
Overall, the S&P 500’s climb to the 5,000 level underscores the current strength and optimism in the market, with expectations of continued growth and upward momentum as investors navigate ongoing economic and financial developments.