The S&P 500 is trading just below its previous all-time high.
Spencer Platt / Getty Images
The S&P 500 has erased nearly all its losses from a hellish 2022 this year.
It now trades just 260 points below its previous all-time high.
Cooling inflation and the rise of AI have fueled the benchmark index’s latest rally.
US stocks have reached a level that might have seemed unthinkable during the lows of last year’s bear market.
In the space of just nine months, the benchmark S&P 500 index has erased nearly all its losses from a hellish 2022.
It now trades just 260 points, or around 6%, below the record high it hit last January, while other key gauges like the Nasdaq Composite and Dow Jones Industrial Average have also racked up major gains.
Cooling inflation, a massive rise in investor interest in AI, and forecasters abandoning their recession predictions based on positive economic data have all helped power stocks’ 2023 surge.
The so-called “Magnificent Seven” tech stocks – Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta Platforms – have led the rally, with each trading at or near record highs as of Friday’s closing bell.
Whether that can last is likely to be the major question for analysts over the second half of 2023.
Some like Fundstrat perma-bull Tom Lee expect the S&P 500’s surge to help it notch new highs by the end of the year, but others point to further interest rate hikes by the Federal Reserve and the risk of an economic downturn as factors that could kill the rally.