S&P 500 hits above 5,500-mark for the first time—32nd record high of 2024

It is the 32nd record high of 2024 for the index, which is indicative of the performance of the top 500 listed companies in the US.

In another stunning achievement this year, the S&P 500 index hit above the 5,500-mark on 3 July for the first time in its history. In fact, it is the 32nd record high of 2024 for the index that is indicative of the performance of the top 500 listed companies in the United States.

Remember that in late January 2024 that the Standard & Poor’s 500 index created headlines when it reached 4,864.60. Since then, it has only been a rollercoaster for the index. It was Federal Reserve chair Jerome Powell’s comments on inflation that spurred the latest upward push for the index.

Powell highlighted the "disinflationary path" of recent economic data. He added that though the recent lowering of inflation is encouraging for the economy, the central bank will wait for more such encouraging evidence to emerge before it can cut down the interest rates.

However, we should be careful not to ascribe undue weight to Powell’s comments as far as S&P 500’s performance is concerned. The index has been performing well for quite some time. The index added $16 trillion (in market capitalisation) during the ongoing rally that began around the end of 2022, marking a significant departure from the lows of that period.

The rally was propelled by the remarkable gains in mega cap and chip stocks. The market is in a swell mood as other indices also reflected similar upward trends. Nasdaq also hit above the mark of 18,000 for the first time in its history on July 3rd.

Rate Cuts in September?

"We just want to understand that the levels that we're seeing are a true reading on what is actually happening with underlying inflation," said Powell.

When asked if a rate cut is possible in September 2024, he refused to comment. Powell was speaking at a panel in Portugal for a European Central Bank (ECB) conference when he made these remarks.

As per the U.S. Bureau of Labour Statistics, the consumer price index (CPI) rose 3.3% year-over-year (YoY) in May 2024. This is the best CPI figure in the last three months and is only slightly better than the 3.4% gain in April.

Image: Consumer price index in 2024 in the US, by US Bureau of Labour Statistics

The figure makes way for rate cuts if not now than later this year when inflation comes down to the Fed’s target of 2%. This is a very different scenario than from the first quarter of 2024 when the possibility of rate cuts seemed nearly impossible this year as the inflation data was very distressing.