The S&P 500 reaches 5000 points! Historic!

The S&P 500 has just surpassed the 5000 point threshold for the first time ever on February 8, 2024. Since its low in October 2023, the flagship index of the American stock market has soared by nearly 900 points! That’s a staggering increase of over 20%. Behind this historic record lie significantly high valuations and approximately 8500 billion dollars of market capitalization created in 3 months.

S&P 500, a Steady Climb Since October 2023

The S&P 500 has continued to break record after record since it rebounded from its October 2023 trough. The Federal Reserve’s resolve to ease monetary policy and the bounce in corporate earnings have pumped up stock prices. 

The index crossed the 4500 point level in January, and then the 4700 point level in early February. The long-coveted 5000 point mark was finally breached on February 8, 2024, just 3 months after the S&P was below 4200 points.

This spectacular 20% ascent is a testament to the restored confidence of investors in the growth potential of American companies. It has been accompanied by a surge in the total market capitalization of Wall Street.

Valuations in the Stock Market More Stretched Than Ever

As a result of this continual rise, S&P 500 valuations have reached very high levels, close to the records set during the internet bubble of the early 2000s. 

The index now trades at nearly 20 times the expected earnings for 2024, well above the historical average of around 15. The total market capitalization has surpassed 50 trillion dollars.

Some strategists believe that these valuation multiples are not sustainable in the long term and predict a risk of correction if interest rates rise or if economic prospects worsen.

Nevertheless, the Federal Reserve seems determined to extend the stock market rally through its liquidity injections. And as long as profits continue to climb, the party can go on at Wall Street. The S&P 500 could seek to reach 5500 points in the market in the coming months.

With the historical breakthrough of the 5000 points in the stock market, the performance of the S&P 500 since October 2023 commands respect. The leading index of the American stock market has created thousands of billions of dollars in value, even if its multiple devaluations concern some investors. The 5500 point milestone is already in sight, if the wind of economic expansion continues to carry Wall Street.