Will the S&P 500 Reward Investors This Year by Hitting 6,000?
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UPDATE Nov. 8 at 4:27 p.m. ET: The S&P 500 hit a new record high of 6,000 on Friday as stocks rode a post-election rally.
Market observers had predicted that the S&P — the largest and most broad-based of the three major market indices, alongside the Dow Jones Industrial Average and the tech-heavy Nasdaq — would crack the (largely symbolic) threshold before the end of 2024. The index blew through that milestone with nearly two months left in the year.
After touching 6,000, it ticked down a bit. The S&P closed on Friday at 5,995.54, gaining 0.38% for the day and more than 26% for the year. It wasn't the only major index to hit a record on Friday, either. The Dow Jones Industrial Average topped 44,000 for the first time before closing just below that benchmark.
As stocks continue to march higher, new evidence suggests that the market could blow through another record by the end of 2024.
According to the latest Bloomberg Markets Live Pulse survey, the S&P 500 will hit a record high of 6,000 before the year is out. This feat would require the index to notch another 2.3% in gains on top of its already-record highs. Its movement over time reflects fluctuations in value of the 500 companies within it. So far in 2024, the index has climbed a robust 23%: more than double its historical average for returns.
The S&P 500 notched its last four-figure milestone earlier this year, hitting 5,000 back in February — a meteoric rise, considering that the index, which first closed above 100 in 1968, took another 30 years to close above 1,000, which it did in 1998.
Now that we're staring down 6,000, market observers say hitting this milestone isn’t just possible — it's likely.
“Our base case is maybe we hit it between now and year-end,” says Adam Turnquist, chief technical strategist for LPL Financial.
Turnquist and other pros say this is most likely to happen after the presidential election, when the combination of greater certainty about the path of fiscal policy going forward and prevalence of year-end market rallies would function as tailwinds.
Bloomberg survey respondents, a group of more than 400 investors polled as part of a long-running survey series, were optimistic that corporate earnings in the final couple months of 2024 could give Wall Street enough optimistic oomph to carry the index over this threshold. Respondents rated earnings as a bigger influence on market momentum than either the outcome of the U.S. election or future interest rate cuts from the Federal Reserve.
This week could be the deciding factor in determining if the S&P will crack 6,000 in the near future. That's because about 20% of the index’s component companies, including closely-scrutinized names like Boeing, IBM and Tesla, are set to report earnings to investors this week.
“In spite of all the domestic political anxiety and geopolitical turmoil, the companies that make up the S&P 500 are doing well,” says Ross Mayfield, an investment strategist at Baird.
Experts say there isn’t anything economically significant about the 6,000 benchmark, but these milestone figures are easy-to-understand reflections of consumer and investor sentiment.
“At the end of the day, we just have a psychological attraction to big round numbers,” Mayfield says.
Some pros fret about 'conundrum' of optimism
Some Wall Street experts, though, are concerned that this winning streak could be close to over.
A recent Goldman Sachs report predicts that the S&P will grow at an anemic annualized rate of 3% over the next decade. “Investors should be prepared for equity returns during the next decade that are towards the lower end of their typical performance distribution,” analysts warned.
Michael Grant, co-chief investment officer at Calamos Investments, cautioned in a MarketWatch interview that investor expectations of continued growth in perpetuity, evidence of which he suggests is apparent today, indicate that a market peak is near. He points to the ratio of share price to earnings at S&P companies, which, at the median, is as high as it’s been since shortly before the dot-com crash of 2000.
“This is the conundrum: an ‘invincibility syndrome’ signals a crescendo. It has historically emerged when markets are in the process of establishing a major summit,” he told MarketWatch.
Some also express concern that big gains by a handful of companies like Google parent Alphabet and chipmaker Nvidia could be playing an outsized role in driving the movement of the index — and the buoyant market sentiment that accompanies it.
“We do see some near-term risks. We do have some frothy sentiment,” Turnquist says, but he predicts that volatility between now and the end of the year is likely to be short-lived. “Despite some of the vulnerabilities, the path of least resistance for stocks is likely higher.”
Ultimately, this means that it’s best not to make any snap decisions regardless of short-term fluctuations.
“Our guidance has been not to let the headline uncertainty about politics get people out of the market,” Mayfield says.
Jay Hatfield, CEO of Infrastructure Capital Advisors, says investors should avoid the temptation of yanking money out of the market at the first sign of a dip or keeping large amounts of cash on the sidelines. Staying in the market over the long term — through both peaks and troughs — is the best way to build wealth over time.
“This stock market is likely to continue going up,” he says. “When you compound, that’s extremely powerful.”
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