The S & P 500 broke past 5,000 for the first time ever this week, but investors will see if the momentum can stick in the week ahead with more inflation data and earnings results on deck. The 5,000 milestone does not represent technical resistance for the S & P 500, but a nice, round number has held psychological significance for investors in the past — and could represent a level at which stocks can further rally or consolidate from here. The broader index first crossed 4,000 in April 2021. The debate over whether stocks continue their record-breaking move or break down is a point of contention for investors. Some expect an expanding, albeit slowing, economy will continue to power earnings growth and drive stock prices higher. But others worry the milestone is a reason to be more cautious and advise traders to use the occasion to take some profits, especially in what appear to be richly valued mega-cap tech stocks. Worrying signals they cite include rising bond yields, with the 10-year Treasury yield ticking higher to 4.15% this week. Wharton Business School’s Jeremy Siegel told CNBC’s “Closing Bell” on Thursday: “Remember, when we think about 5,000, it wasn’t long ago when we had some very big names telling us the S & P was going down to 3,600,” “Stocks, for the long run, there’s going to be volatility. I don’t advise playing the game of being a short-run trader, I know a lot of people do,” Siegel continued. “But I don’t think right now the market is overvalued for a long-term investor by any means.” But Karim El Nokali, investment strategist at Schroders, said investors should proceed with caution: “Usually, when the market sees those big round numbers — sometimes the first time it encounters those numbers — you see a bit of a retracement.” On Friday, both the S & P 500 and the Nasdaq Composite were headed for their fifth straight week of gains, and their 14th winning week in 15. Better data supports the bull case The recent optimism in markets can be…
2024-02-09 15:01:00
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