The S&P 500 index on Friday once again surpassed its previous closing high set more than two years ago, hitting a new intraday high after swinging within a narrow trading range for almost a month.
The large-cap benchmark S&P 500 index SPX rose to 4,826.91 on Friday, surpassing its intraday high of 4,818.62 set on January 4, 2022. The index is also on pace to close above its all-time high of 4,796.56 set on January 4, 2022. Jan. 3, 2022, according to FactSet data.
The move comes amid a volatile start to the year for stocks, analysts said, due to a resurgence in U.S. Treasury yields and uncertainty over the Federal Reserve's March interest rate cut. It was conducted.
Friday also marks the 513th day since the S&P 500 last set a new closing high. If the index closes above Friday's close, it will end its longest period without a new closing high since October, when it recorded 1,375 consecutive business days. According to Dow Jones Market Data, from 2007 to March 2013 (see table below).
U.S. stocks have fallen from near record highs amid a cloud of uncertainty over the fate of monetary policy in 2024 due to strong economic data and a pushback from Federal Reserve officials against market expectations for aggressive interest rate cuts. , entered the new year with a downward trend. This pushed long-term government bond yields to their highest level since December.
The S&P 500 Index remains in a short-term range that has continued since mid-December. Over the past month, this range has been limited by intraday levels near 4,700 on the low and slightly above 4,800 on the high, although the S&P 500 has closed above its all-time high of 4,796.56 during this period. That never happened. According to FactSet data.
However, the stock posted a solid recovery on Thursday after chipmaker Taiwan Semiconductor Manufacturing Co.'s positive outlook for 2024.
TSM
Led the outperformance of large-cap technology stocks in the S&P 500 and Nasdaq Composite COMP.
Write off all losses in 2024.
Mark Arbeter, president of Arbeter Investments LLC, said there are short-term technical concerns for the major indexes as stocks “are grappling with bearish daily momentum divergence” from extreme overbought territory at the end of 2023. He said there was no visible damage. -Market sentiment was “redemptively bullish.”
But he also saw increasing technical evidence pointing to “some sort of rebound or correction,” with some major indexes at or near record highs. “There are a number of more obscure indicators that don't align with the bulls,” Arbetter said in a note to clients Thursday.
For example, the VIX term structure comparing 1-month futures
VX.1
CBOE Volatility Index VIX to 3 Month VIX Futures
VXJ24
It shows that the expected future implied volatility of the S&P 500 is in backwardation.
This means futures traders are pricing in lower short-term volatility, suggesting there is complacency in the market, which often leads to trouble, Arbeter wrote. “While this indicator may be premature, it is fairly accurate in predicting future problems,” he said.
Meanwhile, Ned Davis Research strategists Ed Clissold and London Stockton say historical data suggests that a return to record territory after a gap of at least a year will lead to positive returns a year later. He pointed out that they are connected.
“Did the rally to new highs leave the market overbought and require a correction? Or was it a breakout into a new uptrend? History favors the latter.” Clissold and Stockton wrote in a December note to clients.
U.S. stocks rose on Friday, with the S&P 500 index up 23 points, or 0.5%, to trade at 4,803.93, the Dow Jones Industrial Average DJIA up 150 points, or 0.4%, and the Nasdaq Composite Index up 0.6%. It was announced that. FactSet data.
—William Watts contributed.
