S&P 500 hits record high amid strong earnings and easing inflation

The S&P 500 returned to a record high on Thursday, rising above its peak in early December, building on gains after President Trump repeated his pledge to lower the price of oil – a major factor in inflation.

The S&P 500 was up just 0.5 percent on Thursday, but the gains helped snap a winning streak that began more than a week ago with data that showed inflation slowed in the December than expected by economists. With Thursday’s rise, the index rose 4 percent in the first three weeks of the year.

The recent rally came after weeks of market volatility, as investors worried about the impact of rising inflation on Mr Trump’s promised policies – particularly, wages. news and mass layoff programs that could push up consumer prices and wages.

Wall Street was worried that rising prices would prompt the Federal Reserve to leave interest rates higher than previously expected, as it sought to control consumer prices. Higher interest rates raise the cost of borrowing for consumers and businesses and often weigh on stock market valuations.

But the release of inflation data in recent weeks eased those concerns, with investors getting another boost on Thursday, when Mr Trump promised, at the World Economic Forum in Davos, Switzerland, but “to lower the price of oil”.

West Texas Intermediate crude fell more than 1 percent on Thursday to $74.62 a barrel.

In the bond market, the two-year Treasury rate – which is sensitive to changes in interest rate expectations, which depends on the direction of inflation – decreased on Thursday.

While the 10-year Treasury rate – the key interest rate that supports lending to businesses and consumers – edged higher on Thursday, it also edged lower. that was last week.

“Yields fell after that data,” said Lauren Goodwin, an economist at New York Life Investments. “That’s the basis of the equity market movement that we’ve had this week.”

Some investors were also happy to see the Trump administration take its time with tariffs and threats of mass deportations. Mr Trump has pledged to impose tariffs of 25 per cent on imports from Canada and Mexico, and 10 per cent on imports from China – but not until February. Before taking office, the president said he was considering tariffs of up to 60 percent on imports from China.

“The worst fears didn’t happen and that helped the market go higher,” said David Kelly, head of global strategy at JP Morgan Asset Management.

The rise in stock prices has been supported by a series of corporate earnings reports. Netflix rose nearly 10 percent on Wednesday after reporting the strongest subscriber growth in its history during the final quarter of last year. General Electric rose about 6.5 percent on Thursday after beating profit expectations.

For companies in the S&P 500, revenue will grow more than 12 percent for the fourth quarter compared to the same period in 2023, according to data from on FactSet. That would make it the best quarter for the company’s profits until the end of 2021.

But some signs of caution persist: Inflows into U.S. Treasuries have slowed and investor ownership of stocks has fallen to a two-month low. from Deutsche Bank.

The S&P 500 is up more than 20 percent in 2023 and 2024, leading to warnings that the rally may go too far, especially as the growth of big tech companies that dominate the market today, making many investors depend on their performance.

Jamie Dimon, CEO of JPMorgan Chase, said in an interview with CNBC on Wednesday that asset prices have already increased. “You need a good product to justify those costs,” he said.

That’s why eliminating chaos from planned events is critical to the new administration, Ms. Goodwin said.

“The change of our time is the risk or reality of the market in Social Truth,” he said. “It’s not a good thing or a bad thing, it’s a new thing.”