Stocks Cap Best Two Years in Quarter-Century!
The S&P 500 index, a benchmark for the US stock market, closed Thursday’s trading session at 3,747.94, wrapping up the second best performance in the past quarter century. The index has gained 44.6% since the end of 2016, outpacing the previous best two-year gain of 42.2% set in 1997-1999.
The remarkable climb is attributed to a combination of factors, including an economic recovery from the global financial crisis, multiple interest rate cuts by the Federal Reserve, and trillions of dollars in quantitative easing. Additionally, a highly successful fiscal stimulus package and a resurgent technology sector have also contributed to the market’s upward trajectory.
Notably, the S&P 500 has risen in 17 of the past 20 months, with only three down months during that period. The index has also experienced 12 months of gains of 2% or more, the most since 1995-1996.
The remarkable surge in stocks has led to a significant increase in wealth creation, with many investors reaping the benefits. According to a report, over 30% of households now own stocks, either directly or indirectly through retirement accounts, resulting in a total of 147 million individual stock market participants.
The latest rally is also notable for its blending of sectors, with most major industries contributing to the gains. Technology, healthcare, and communication services have led the charge, driven by the rapid growth of companies like Amazon, Apple, and Alphabet. Meanwhile, the energy sector has also seen a significant turnaround, buoyed by a recovery in oil prices.
The roaring start to the year has raised concerns about asset valuations, with some warning of a possible correction. However, market experts are attributing the gains to a strong economy and relatively low interest rates, which have fueled a speculative bubble in many parts of the market. For now, the S&P 500 remains on a record-breaking pace, with many expecting the momentum to continue in the coming months.