The S&P 500 has just crossed the threshold of 5,000 points for the very first time on February 8, 2024. Since its low in October 2023, the flagship index of the American stock market has soared by nearly 900 points. ! Sor a dizzying increase of more than 20%. Behind this historic record lie very high valuations and nearly $8,500 billion in market capitalization created in 3 months.
S&P 500, a continuous rise since October 2023
The S&P 500 has continued to break records after records since it rose from its October 2023 low. The FED’s determination to ease its monetary policy and the rebound in corporate profits have boosted prices.
The index crossed 4500 points in January, then 4700 points on the stock market at the beginning of February. The coveted 5,000 point mark finally fell on February 8, 2024, only 3 months after the S&P was below 4,200 points.
This spectacular rise of around 20% demonstrates investors’ newfound confidence in the growth potential of American companies. It was accompanied by a surge in the overall market capitalization of Wall Street.
Ever tighter stock market valuations
As a result of this continued surge, the valuations of the S&P 500 are reaching very high levels, close to the records of the internet bubble of the early 2000s.
The index now trades at almost 20 times the expected benefits in 2024, well beyond the historical average around 15. The total capitalization on the stock market exceeds 50,000 billion dollars.
Some strategists believe that these valuation multiples are not sustainable in the long term and portend a risk of a future correction, if interest rates rise or if the economic outlook deteriorates.
Nevertheless, the FED seems determined to prolong the stock market rally with its liquidity injections. And as long as profits grow, the party can continue on Wall Street. The S&P 500 could seek to reach 5,500 points on the stock market in the coming months.
With the historic crossing of 5,000 points on the stock market, the performance of the S&P 500 since October 2023 commands respect. The flagship index of the American stock market creates trillions of dollars of value, even if its multiple devaluations worry some investors. The milestone of 5,500 points is already looming, if the wind of economic expansion continues to carry Wall Street.
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