Written by Mark DeCambre
Five years in the making. That is the time it has taken for the S&P 500 stock index to travel from its previous thousand-point plateau to an intraday milestone of 3,000 for the first time in its history. It remains to be seen if the benchmark can close at that level, but the sojourn above that mark may hold some importance.
The stock gauge first closed at 2,000 on Aug. 26, 2014, according to Dow Jones Market Data. Although it may be just another number for some on Wall Street, for others the move for the broad-market benchmark reflects a round-number level that investors consider bullish for market sentiment.
“Momentum could continue to push markets higher in the next few days now [that] the Fed’s stance is more clear,” wrote Adrian Lowcock, head of personal investing at investment platform Willis Owen, in a Wednesday note.
The S&P 500’s SPX, +0.45% intraday high was 3,002.89 on Wednesday, but the index has pulled back in afternoon trade after Federal Reserve Chairman Jerome Powell kicked off his first of two days of semiannual congressional testimony that many have read as signaling a rate cut at the end of the month, which would presumably support further gains for stocks because lower rates translate to a lower cost of capital for corporations and individuals.
The S&P 500’s milestone step-up comes as investors wrestle with equity markets that have mostly been trading near all-time highs even as signs of slowing economic growth inside and outside of the U.S. persists, raising some doubts about the durability of a domestic economic expansion in its record-setting 11th year.
Global economic headwinds, partly wrought by trade tensions between the U.S. and China, have been cited as one reason that market participants are viewing this run to monumental levels with some circumspection.
That said, it’s worth considering how the market has achieved its climb to new heights from 2,000.
Alongside the S&P 500, the Dow Jones Industrial Average DJIA, +0.29% and the Nasdaq Composite Index COMP, +0.75% were testing fresh all-time highs. Powell on Wednesday told a House committee that policy makers at the rate-setting Federal Open Market Committee were committed to using their tools to help the economy, and in many ways the market, sustain its record expansion.
In his prepared remarks, Powell said the U.S. economy is suffering from a bout of uncertainty caused by trade tensions and slower global growth and pledged to act as needed to support demand.
“Since [the Fed meeting in mid-June], based on incoming data and other developments,” he said, “it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”
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