While there isn’t a whole lot of fundamental significance with S&P 500 passing the 2,000 point barrier, there is a psychological significance with traders and investors. It solidifies the nearly six year rally it’s taken to get to this point since March 2009, when it hit a low during the financial crisis. Since then it’s tripled its value and is up 196%.
Over the last 12 months, the S&P 500 has managed to climb through 1,700 points, 1800 points, 1,900 points and now 2,000 points. It took just over three months (94 days) for the index to go from 1,900 to 2,000 points. It is now up almost 8% for the year.
It’s been good news all around for investors. Signs of an improving US economy have helped stocks to rally for three straight weeks. While there has been some geopolitical worries, especially between Russia and Ukraine, the strong economic data has allowed them to overcome these for the most part. That being said, an escalation in conflict in Ukraine or in Iraq could quickly send stocks lower.
Many analysts are predicting the S&P 500 will end the year above 2,000. While their final estimates vary widely, it seems that most now see a 2,000+ point future for the index. That being said, most analysts no longer see stocks as being cheap as they are close to historical norms. There are even bears starting to speak up that prices are at the point of creating a bubble.
If the index is going to end above that mark this week, it will need to stay positive on some of the news being released this week. That includes the release of the Service Sector Outlook Survey for August from the Federal Reserve Bank of Dallas and the building permit numbers for July from Department of Commerce. Numbers on durable goods for July will also be released Tuesday, as well as a report on consumer confidence for August.
On Wednesday, the weekly Mortgage Market Index will be released by the Mortgage Bankers Association. Then on Thursday GDP data for the second quarter will be released by the Department of Commerce, the National Association of Realtors will release the July Pending Home Index and Dollar General is schedule to release its second quarter results.
The other indexes had a good day as well. The Dow Jones industrial average increased 75.65 points (0.44%) to end the day at 17,076.87, and the Nasdaq Composite rose 18.80 points (0.41%) to end at 4,557.35.
(Photo courtesy of joel)