The Standard & Poor’s 500 index had a close miss past week as it failed to make history of reaching the 2000 milestone for the first time. Past week, the S&P 500 continued flirting with the magic numbers but it fell short of 12 points by week’s end. But investors continue to impose faith and waiting impatiently for the history-making event again next week.
Market historians say if any such event occurs at the S&P 500 then it would be a big day for the economy and an impressive accomplishment by the index.
On March 9, 2009, the index had fallen to 676.53 at the bottom of the 2007-2009 bear market. At the time, the fears of S&P 500 crashing to zero were looming large among the investors but the index was soon back with a bang.
The S&P 500 hit the all-time closing high of 1,992.37 on Friday on progressive reports from improving housing and manufacturing sectors. These major developments indicated the strengthening of world’s largest economy.
Analysts say the three rounds of stimulus by the Fed and outstanding corporate earnings have boosted the S&P 500 index by almost triple since its low in March 2009. Notably, the index has not seen a drop of 10 percent in almost three years. The S&P 500 trades at 17.8 times the reported earnings of its firms, nearing the highest level since 2010.
The S&P 500 index has recovered 4.1 percent from a two-month low on August 7. The easing war conditions in Ukraine and speculations of low interest rates by the central banks were the major drivers of this recovery.
“Janet Yellen does not appear to have broken any new ground. The Fed is doing a remarkable job at preparing the market for the eventual hike in interest rates. The advance to the record has been supported by good US economic data of late. As long as the economy continues to perform well, the market is in good shape.” Jim McDonald, chief investment strategist at Chicago-based Northern Trust Corp.
The minutes from the July meeting of Fed, which was released earlier this week, toughened the commitment of the central bank on backing the recovery. However, some policy makers expressed their willingness to raise key rates sooner than expected.