Wall Street, record week for S&P 500 and Microsoft: how long can it last?
The index closes above 5,000 points for the first time, while the Redmond giant is worth more than $3.1 trillion
3' min read
Key points
3' min read
It was the week of records, which just ended, for the US stock market. Two records were broken: the first is that of the S&P 500 index; the other is targeted at Microsoft, and concerns the highest capitalisation ever achieved on Wall Street.
S&P above 5,000
On Friday 9 February the S&P 500 stock index touched the 5,000-point mark for the first time, closing the day 5,019.46. That is an increase of over 5% since the beginning of the year. In fact, the day before (Thursday, 8 February), the index had already breached the 5,000 mark, albeit by a very small margin and before retracing to 4,997.91.
The S&P 500 had first exceeded 4,000 points in April 2021, continuing its rise throughout that year before falling back below the level in 2022.
On the other hand, 2024 started with enthusiasm, driven by the growth of some technology stocks. Chip maker, Nvidia, and Meta (the company that owns Facebook, Whatsapp and Instagram) led the market to the upside, each advancing more than 30% in the new year. Strong gains by the largest companies more than offset investors' concerns about the Federal Reserve's plans to cut US interest rates this year.
Records, but also doubts
The S&P record, however, has to be read with some care. Because several analysts look at the breadth of the market that has driven this record. The number of stocks that participated in the rally is not very large, which raises concerns that recent gains could be reversed if the market leaders stumble. It would be a different matter if the market's momentum had been broad, i.e. if the number of stocks participating in the index's rise had been greater. In this case it would have been considered a positive signal. As mentioned, however, the market breadth was limited for most of 2023, with the 24% gain of the S&P 500 led mainly by the so-called Magnificent Seven, the group of which Meta, Microsoft, Alphabet, Apple and Amazon are members. The breadth improved towards the end of the year, but some predictive analyses show that it will shrink again in 2024. For example, while the S&P 500 rose 5.4 per cent and closed at a record high on Friday, the 10-day average of New York Stock Exchange and Nasdaq stocks reaching new highs fell to the lowest level since July, according to data from Hi Mount Research. At the same time, only 62% of large-cap stocks were above their 50-day moving average at the close last Thursday, down from 87% in December, according to data from Thrasher Analytics.
