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In the end, after much back and forth, the historic threshold was exceeded. The S&P 500, during trading on 9/2/2024, went above 5,000 points. Real! The basket of the 500 largest capitalizations on Wall Street has been setting records for some time. And yet, the goal achieved today is important. It is a level, even psychological, that has always been monitored – and expected – by investors.
The cause
The reasons behind such a goal are multiple. Among others, we must remember, first and foremost, the excitement for artificial intelligence. Big tech, which are the largest capitalized companies, have been driven by the narrative about Artificial Intelligence (AI). Until recently, operators themselves were unclear about how AI could generate cash flows. So much so that the rally linked to the new technology was considered to be very “marketing oriented”. In the last round of quarterly reports, however, companies such as Amazon or Microsoft showed the first concrete revenues linked to AI.
Company accounts
But it’s not just a question of artificial intelligence. Another factor that played in favor – although as mentioned, artificial intelligence may have lent a hand – concerns the latest earnings season on Wall Street. Despite concerns about the difficult macro and geopolitical context – just think of the wars in Ukraine and Palestine -, companies are exceeding expectations. Real! Often, as the publication of the data approaches, the market consensus is lowered also with the aim of having a less challenging comparison regarding the company accounts themselves. That said, however, about 80% of S&P 500 companies reported better-than-expected results. Which, on the one hand, has led analysts to revise upwards the growth projections of overall profits for the quarter in question; and on the other, by improving estimates for the current quarter, prices have been pushed upwards.
The Fed’s rate cut
Yes, pushes upwards. A document also lent a hand, Bloomberg indicates, which is normally not analyzed too much by investors. This is a report published by the Government which, in simple words, underlines how the current inflation – adjusted for revisions – is in fact the same as at the beginning of last year. In other words: the data would indicate no further overheating of the consumer price index and, therefore, the greater probability of the Fed starting to cut rates. Rivers of words have been spent on this front. Beyond this, it is clear that the start – finally – of the easing with respect to the cost of money is a boon for the stock markets.
A historic passage
Those stock exchanges which, over the years, have gradually surpassed different levels. The 1,000 point milestone – it should be remembered – was passed way back on February 2, 1998. Then it’s time for the 2,000 point – surpassed on August 26, 2014 – and the 3,000 mark (July 12, 2019). The index’s climb – which was obviously marked by important setbacks such as those linked to Covid – subsequently continued. The Wall Street basket crossed the 4,000 point ribbon on April 1, 2021. Today the new record
2024-02-09 19:18:45
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