The S&P 500 has reached a significant milestone, closing above 5,000 for the first time in history. This is great news for investors with 401(k) retirement accounts, as these accounts heavily rely on stock market performance. The latest record comes just three weeks after the index achieved its first closing record since January 2022.
Tom Hainlin, national investment strategist at U.S. Bank Wealth Management, described this achievement as a symbolic milestone. Although it is a big round number and a record high, Hainlin believes it indicates that the economy is doing well for the average person with a 401(k).
The S&P 500 closed the week at 5,026.61, marking a 0.57% increase. The market’s performance has been bolstered by indications that the Federal Reserve has called off rate hikes and may actually cut rates this year. Additionally, the excitement surrounding advancements in artificial intelligence has also contributed to the rise in stock prices.
The S&P 500 is considered one of the best indicators of Wall Street’s health as it includes 500 leading publicly traded companies. When this benchmark index rises, it tends to have positive implications for Americans’ 401(k) accounts.
Stephen Suttmeier, Bank of America’s chief equity technical strategist, noted that while the 5,000 milestone has made headlines, experts caution that it may not be sustained for an extended period. The first few months of an election year tend to be volatile for markets, and historical trends have shown that similar milestones have often been followed by dips. Therefore, it may take some time for the index to find stability above the 5,000 mark.
Despite the possibility of a fall, Kristina Hooper, chief global market strategist at Invesco, sees the milestone as a demonstration of the market’s resilience. She highlighted how the S&P 500 has already doubled since surpassing 2,500 in September 2017. According to Hooper, the significance lies in reminding investors about the importance of staying invested.
However, Adam Turnquist, chief technical strategist for LPL Financial, believes that the milestone could provide a psychological boost for the market. He pointed out that past performance following major milestones has generally been positive, with an average 12-month return of 10.4%.
In conclusion, the S&P 500’s surpassing of the 5,000 mark is a noteworthy accomplishment. Although experts offer differing views on its significance and sustainability, it serves as a reminder of the importance of staying invested. Investors should remain cautiously optimistic and closely monitor market trends.
