S&P 500's New Record High Could Signal Potential for Extended Gains Ahead
As we all know, the S&P 500 index achieved a new intraday record high last Friday. It is the most recent of the three major U.S. indexes to attain such a milestone since the bear market of 2022, joining the Nasdaq 100 index and the Dow Jones Industrial Average.
Having peaked nearly two years ago, the S&P 500 experienced a decline of as much as a quarter of its value, reaching a closing low of 3,577 on Oct. 12, 2022. This means the index went 512 trading days without a record until Friday, placing it as the sixth-longest streak since 1928, according to Ned Davis Research.
Despite the seemingly negative milestone, it is worth noting that historical data indicates that one year after reaching new highs, the index has risen 13 out of 14 times, with an average increase of +13%.
Moreover, except for the off year in 2022, the index has recorded a double-digit annual return for four of the last five years.
Tech stocks posted a solid rally on Thursday and Friday, driven by an optimistic 2024 outlook from chipmaker Taiwan Semiconductor Manufacturing (NYSE:TSM). This contributed to an outperformance of mega-cap tech stocks, resulting in the S&P 500 and Nasdaq erasing their 2024 losses and turning positive year-to-date.
As per data from Societe Generale, hedge funds currently maintain the highest level of Nasdaq 100 futures buying in nearly seven years.
Meanwhile, a global survey of fund managers conducted by Bank of America showed that the most crowded trades by investors are in the so-called Magnificent Seven stocks, namely Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Nvidia (NASDAQ:NVDA), Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT).
Yes, the Magnificent Seven had an extraordinary
Read more on investing.com
