Buoyed by overall optimism, the S&P 500 broke through the 4,000 level for the first time in history. The index rose 1.2% or 46.98 points to 4019.87. Reaching 4,000 took the S&P 500 434 trading days. Thursday’s milestone also meant the S&P is now nearly double that of the March low last year at 2,192.
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Meanwhile, the other major indices also oversaw a day of gains. The Nasdaq Composite rose 233.23 points, or 1.8%, to 13480.11. In addition, the Dow Jones Industrial Average added 171.66 points, or 0.5%, to close at 33153.21.
Previously, the index needed 1,227 sessions before it climbed from 2000 to 3000. TIn contrast, the S&P 500 went 16 years before the index doubled from 1000 in 1998. Then, It took around seven years to double from 2000 to 4000.
Starting the 2nd Quarter With a Bang
Lindsey Bell, the chief investment strategist of Ally Invest, welcomed the auspicious start of the second quarter. The S&P 500 reaching a new milestone bodes well for investor confidence.
“There’s always some excitement starting a new quarter,” she said. But, Bell warned that the market can linger at the same level for a bit. “Lots of times the market has to test that level a few times before it can go higher,” she explained.
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However, investors are anticipating continuous climbs for stocks in the second quarter. Many see a surge in economic growth given the favorable climate right now. Vaccination rates for coronavirus are increasing every week as vaccine stocks arrive continuously. Stimulus checks are arriving alongside revitalized spending programs by the government. Meanwhile, the risks associated with rising bond yields and continued pandemic problems in Europe still spook some cautious investors.
The Goldilocks Situation
Some of the excitement over economic recovery is now turning to cautious optimism. Shawn Snyder, CITI US Wealth Management strategist called it COVID jitters, a mixture of inflation concerns and Federal Reserve policy changes. “We’re exiting this Goldilocks situation [for stocks] and wondering if the porridge is too hot,” he said.
Meanwhile, some investors openly question if the rotation from tech sector stocks into growth stocks such as banks and energy is going out of hand. Growth stocks in tech slowed down in the first quarter as investors shifted to companies that expect to grow from the recovery.
Tech Stocks Still Driving Growth
Danske Bank Wealth Management strategist Lars Andersen thinks a more methodical approach will work better now. “We are entering a period of time when there is a bit more risk, and for that, I want to have a more balanced approach,” he said. Andersen believes that information-technology stocks including Microsoft and Salesforce can cushion the impact when cyclical stocks slow down.
In fact, five tech stocks drove the S&P 500’s growth even as value stocks started getting more looks. Apple, Microsoft, Amazon.com, Facebook, and Alphabet (Google) claimed responsibility for 44% of the S&P 500’s gains.
More Optimism in the Employment Front
Even as jobless rates rose again last week, economists foresee lowered unemployment claims for the next few months. Factories are buzzing, as evidenced by purchase orders for raw materials registered higher numbers. March reported a solid month for new orders, output, and employment, with PMI coming in at 64.7, higher than the expected 61.7.
Watch CNBC Televisions as they report that the S&P 500 kicks off April by setting a new record high and hitting 4,000 for the first time:
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What do you think about the S&P 500’s new milestone of 4000 points? Do you think stocks will continue to grow higher and along with it, the US economy? Let us know what you think about the market and the US economy in general. Share your thoughts in the comment section below.