The S&P 500 on Friday traded back above its last record close in more than two years, hitting a new intraday record high after oscillating in a tight trading range for about a month.
The large benchmark S&P 500 index traded as high as 4,826.91 on Friday, surpassing its record intraday high of 4,818.62 set on January 4, 2022. The index is also on track to end above a record closing high of 4,796.56 set on January 3, 2022, according to data FactSet.
The move comes amid a volatile start to the year for stocks that analysts attributed to a renewed rise in Treasury yields and uncertainty over a March interest rate cut by the Federal Reserve.
Friday also marks the 513th day since the S&P 500’s last record high. If the index finishes above Friday’s record closing high, that would end the longest stretch below an all-time high closing high since the 1,375-day streak from October. 2007 to March 2013, according to Dow Jones market data (see table below).
US stocks opened the new year on a downward trend, retreating from near-record highs, as strong economic data and resistance from Federal Reserve officials against market expectations of deep interest rate cuts led to a continuing cloud of uncertainty over the path of monetary policy in 2024. This pushed long-term Treasury yields to their highest levels since December.
The S&P 500 has remained in a short-term trading range that has been in place since mid-December. The range is limited to the intraday level of around 4,700 on the downside and the intraday level of just over 4,800 on the upside for the past month, but the S&P 500 never posted a close above the record high of 4,796.56 during that period. According to FactSet data.
However, stocks posted a strong rebound on Thursday with an upbeat outlook for 2024 by Taiwanese chipmaker Semiconductor Manufacturing Co.
TSM
Led outperformance from large-cap technology stocks that saw the S&P 500 and Nasdaq Composite COMP
Erase all their losses for 2024.
Mark Arbeter, president of Arbeter Investments LLC, said he saw no short-term technical damage to the major indexes as “they are all running on downward daily momentum deviations” from extreme overbought territory at the end of 2023, when stock-market sentiment “was bullish.” Extremely”.
But he also saw technical evidence continuing to build towards “some type of pullback or correction” with some major indicators reaching or near all-time highs. “There are a lot of vague indicators that are not sitting well with the bulls,” Arbiter said in a client note on Thursday.
For example, the term structure of the VIX, which compares one-month futures contracts
VX.1
On the Cboe VIX Volatility Index to three-month VIX futures
VXJ24
It shows the future implied volatility forecast for the S&P 500, which is lagging.
This means futures traders are pricing in less volatility in the near term, suggesting there is complacency in the market that often leads to problems, Arbiter wrote. “Sometimes, this can be an early indicator but it is very accurate in seeing problems in the future,” he said.
Meanwhile, historical data shows that a return to benchmark territory after a gap of at least a year has led to positive returns a year later, said strategists Ed Clissold and London Stockton of Ned Davis Research.
“Did the rally to new highs leave the market overbought and in need of a correction? Or was it a breakout to a new leg? History is on the side of the latter,” Clissold and Stockton wrote in a note to clients last December.
US stocks rose on Friday, with the S&P 500 rising 23 points, or 0.5%, to trade at 4,803.93, while the Dow Jones Industrial Average (DJIA) rose 150 points, or 0.4%, and the Nasdaq Composite rose 0.6%, according to FactSet data.
-William Watts contributed.