S&P 500 nears conclusion of a $9.8 trillion rollercoaster journey; check out the latest developments.
Fun, Engaging Take on the S&P 500's Dramatic Recovery
The S&P 500 has been on a wild ride, flirting with a new all-time high in recent days, following a tumultuous four-month period that saw it lose and then gain back a staggering $9.8 trillion in market value!
This rollercoaster journey can be credited to President Trump's trade policies that have shaken markets left and right. The S&P 500 hit its last record high on February 19, only to plummet as much as 18.9% by early April due to tariff confusion. But lemme tell ya, this index ain't got no quit in it! It's bounced back with a vengeance, soaring over 23% since touching the precipice of a bear market back in April.
Things are lookin' up for US stocks, as the Dow, S&P 500, and Nasdaq all ended the week higher. Even though the Nasdaq briefly touched its old record high in December, it dropped short of claiming a new one by the closing bell. But hey, close only counts in horseshoes and hand grenades, right?
The S&P 500 is clearly on a mission, as it tested fresh record highs during trading but fell below by the bell on Thursday. In order to officially break its previous record, it needed to finish the day with a gain of 0.86%, but you can't have everything, I suppose.
It ain't all sunshine and roses, though. The Dow is still 3.75% away from its record high, set back in December. The index has been weighed down by heavyweights like UnitedHealth Group, which has dropped a whopping 40%.
$9.8 Trillion Recovery
At its low on April 8, the S&P 500 had lost a whopping $9.8 trillion in market value since its record high on February 19, according to FactSet data. The index is poised to recover all of that market value as it tests a new record high.
Analysts are mixed on whether the S&P 500 can continue to climb higher, or if its return to record highs means there's more downside to come. With tensions in the Middle East cooling down, the focus has shifted back to Trump's agenda. Congress hopes to send the president's budget bill to his desk by July 4, and his administration's deadline for trade deals is July 9.
"Meaningful progress on any of these matters can bolster equities to fresh records," José Torres, senior economist at Interactive Brokers, said in a note. Investors will be keenly focused on how tariff rates ultimately settle and whether Trump's trade policy might reignite inflation in the coming weeks.
"It would help stocks if we were to see a narrative shift from a focus on tariff, trade policy, and geopolitics to company fundamentals," Carol Schleif, chief market strategist, BMO Private Wealth, said in a note.
Despite the rally, the ratio of bullish versus bearish outlooks for the market remains below the historical average, Ed Yardeni, president of Yardeni Research, said in a note. That suggests there might still be some upside for the stock market, as many investors remain wary and are not overly optimistic.
"Greed" was the sentiment driving the market on Thursday, according to CNN's Fear and Greed index. It reached its highest reading in two weeks.
Dollar Tumbles to Three-Year Low
The US dollar hit a three-year low on Thursday after a report by the Wall Street Journal suggested that Trump plans to announce his pick for Federal Reserve Chair Jerome Powell's successor as early as this fall. The US dollar index, which measures the dollar's strength against six major foreign currencies, fell 0.45%.
The possibility of a candidate who is perceived as being more open to lowering interest rates in line with Trump's demands would reinforce the US dollar's current weakening trend, according to Lee Hardman, senior currency analyst at MUFG.
The dollar index has tumbled nearly 10% this year, with the euro and British pound both hitting their highest levels against the dollar in four years. Fears about the Fed's independence have been contributing factors to the broad dollar decline, as global investors fear greater political influence over monetary policy decisions could destabilize the dollar's status as a dominant currency.
Greg Valliere, chief US policy strategist at AGF Investments, called Trump announcing Powell's successor a "terrible idea," as it would be "sure to annoy and confuse the financial markets if there are two Fed chairs." The potential damage to the Fed's independence from political involvement in its decisions could be substantial, Valliere warned.
Investors are keenly focused on the S&P 500's continuation of its recovery, as it tests fresh record highs, following a $9.8 trillion loss and subsequent gain bolstered by presidential policies. This dramatic financial movement has sparked debates among analysts about the potential for further investing opportunities in the business sector. Meanwhile, the US dollar has tumbled to a three-year low, potentially offering a different investing avenue for savvy finance enthusiasts.
