Yahoo Finance S&P 500 Tops 5,600: ETFs in Focus
On Jul 10, 2024, U.S. stocks surged to fresh all-time highs thanks to hawkish remarks from Federal Reserve Chair Jerome Powell and the tech rally. The S&P 500 inched up 1% for a 37th record close this year, topping the 5,600-mark for the first time. The S&P 500 and Nasdaq were each higher for the seventh straight session.
Tech Giants Lead the Rally
Major tech stocks including NVIDIA NVDA, Apple AAPL, Microsoft MSFT, and Google (GOOG, GOOGL) propelled the market higher. Investors should note that per the Earnings Trend issued on Jul 3, 2024, Q2 earnings for the Magnificent Seven companies are expected to be up 25.5% year over year on 13.2% higher revenues. Barring the Magnificent Seven, Q2 earnings growth for the rest of the S&P 500 Index will decline to 5% from 8.6%.
Other Sectors on Recovering Path
Still, earnings growth for the Energy sector is on track to turn positive in Q2 after remaining in negative territory over the previous four quarters. Medical (+19.0%), Energy (+10.9%), Consumer Discretionary (+12.5%) and Finance (+9.0%) as the notable non-tech sectors that have gained momentum.
Rate-Cut Awaiting Ahead?
Investor sentiment was further stimulated by Powell's congressional testimony, which pointed at likely interest rate cuts. Powell emphasized on the cooling inflation and slightly slowing labor market. These two factors can act as tailwinds for a possible rate cut in September.
What Does the Year-End Election Hold for S&P 500?
The 2024 U.S. presidential election is seen as a likely source of uncertainty for the stock market. However, presidential election years have a long track record of success for the S&P 500. In the past 70 years of the S&P 500, the election year has delivered the second-best performance among the four in the presidential tenure, per an article published on optuma.com.
Carson Group's chief market strategist Ryan Detrick observed that historically, the S&P 500 has performed better with a Democratic president, averaging an 11.5% gain, compared to 7.1% under a Republican president, as quoted on Yahoo Finance.
Little Upside Potential for S&P 500 ETFs in Second Half?
The S&P 500 wrapped up the first half at 5,460.48, while many investment houses like Goldman Sachs (as quoted on Reuters) and Citigroup (as quoted on investing.com) projected the equity gauge to hit 5,600 this year, a mark that has been already attained.
However, Evercore ISI increased its target for the S&P 500 to 6,000. Many analysts are of the view that the market breadth is broadening. While growth stocks like mega-cap tech players have been leading the performance, cyclicals and defensives have also been trying to catch up.
Hence, keep a close eye on ETFs like Vanguard S&P 500 ETF VOO, iShares Core S&P 500 ETF IVV, SPDR S&P 500 ETF SPY andInvesco S&P 500 Equal Weight ETF RSP.
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Alphabet Inc. (GOOG) : Free Stock Analysis Report
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SPDR S&P 500 ETF (SPY): ETF Research Reports
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Vanguard S&P 500 ETF (VOO): ETF Research Reports
Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
