On Friday, the S&P 500 hit new closing and intraday highs for the first time in nearly two years, continuing its astonishing rebound over the past year. For all U.S. stock investors, this is undoubtedly another memorable milestone moment. This new closing high confirms that the S&P 500 has been in a bull market since reaching its lowest point of the year on October 12, 2022.

From the previous all-time high closing price of 4796.56 points set on January 3, 2022, to the lowest point in October 2022, the S&P 500 Index fell by 25% during this period. But now, these painful memories of the past have been completely erased. On Friday, the S&P 500 index jumped 1.23% to close at a record high of 4839.81 points; during the session, the benchmark index also hit a record high of 4842.07 points.


Apple, Microsoft, Nvidia, Google's parent company Alphabet, Amazon, Meta and Tesla - these "Big Seven" US stocks that enjoyed great success last year have undoubtedly provided a lot of help to the current bull market of US stocks. This is largely based on investors' hopes for the AI ​​wave and cost-cutting efforts, which have promoted the profit growth of these companies.

also,The U.S. Federal Reserve appears to have completed its rate hike cycle and is beginning to consider when to cut interest rates after the largest wave of monetary tightening in decades, also providing a key boost for stock indexes.

Below, we might as well review the crazy journey of the S&P 500 Index in the past two years from multiple sets of numbers and different dimensions:

"Regaining the old waters" after 512 trading days

According to statistics from industry insiders, from the record high in January 2022 to the present, the S&P 500 Index has experienced a total of 512 trading days. This is the longest window period in which the index has failed to rewrite its historical high in more than ten years.


certainly,Historically speaking, 512 trading days without a new high is not a particularly long time - it is only the sixth longest since 1928. In the 1970s, the S&P 500 went more than seven years without a new high as inflation soared and economic growth stalled.

After reaching its peak two years ago, the S&P 500 hit a closing low of 3,577.03 points on October 12, 2022. The sharp decline at the time came as fast-growing technology companies were hit by the Federal Reserve's aggressive interest rate hikes. In addition, the geopolitical crisis caused by the Russia-Ukraine conflict in Europe, the surge in oil prices exceeding US$100 per barrel, and the inversion of some U.S. bond yield curves indicating an economic recession have all suppressed market sentiment.

Since then, however, the S&P 500 has regained more than $10 trillion in market capitalization. Soaring shares of big technology companies and optimism about artificial intelligence have pushed stock indexes higher over the past year.


It is worth mentioning thatBefore the S&P 500 hit new highs this week,The Dow Jones Industrial Average, represented by blue-chip stocks, hit an all-time high at the end of last year, while the Nasdaq Composite Index, which is dominated by technology stocks, is still about 2% away from its all-time closing high.

Yung-YuMa, chief investment officer of BMO Wealth Management, said: “After two years of high inflation andStock market investors have had a wild time following the extreme rise in interest rates. Now it seems that the U.S. economy is expected to achieve a soft landing. Inflation is cooling and the future outlook for Fed policy is becoming more predictable. "

According to statistics from Ed Clissold, chief U.S. strategist at Ned Davis Research, history serves as a guide. Of the 14 times the S&P 500 hit a new high after more than a year, the index rose further in the next year 13 times, with a median increase of 13%.


The “biggest contributor” behind the S&P 500 index’s new high

Statistics show that since the S&P 500 index bottomed in October 2022, industries such as information technology, communication services, and consumer discretionary goods have led the rebound of the S&P 500 index. These industries are also where the seven giants of the US stock market gather.


In the first half of 2023, the seven largest companies in the S&P 500 index outperformed other constituents by the largest margin since the dot-com bubble. After Apple surged nearly 50% last year, its market value once again exceeded the US$3 trillion mark at the end of that year.

Since October 2022, the company with the largest increase in the S&P 500 Index has been NVIDIA. Its stock price has skyrocketed after releasing an optimistic sales forecast in May last year, and ignited the artificial intelligence craze in one fell swoop, with a cumulative increase of more than 400%. It was followed by Royal Caribbean Cruises, Meta and Broadcom.


In terms of specific points contribution to the index's increase, Microsoft topped the list, contributing 156.90 points to the index's increase. The rest of the top five are Nvidia, Apple, Meta and Amazon.

At the other end of the spectrum, First Republic Bank and SVB Financial Group were two of the worst-performing stocks in the S&P 500 last year as a number of regional banks collapsed. First Republic Bank was eventually acquired by JPMorgan Chase after its share price fell to almost zero, while SVB lost nearly 70% after the collapse of its subsidiary Silicon Valley Bank.


Other major losers during the period included Lumen Technologies, Advance Auto Parts and Enphase Energy - all three companies fell about 60%. However, most of these worst-performing companies are no longer in the S&P 500.

Hot discussion in the industry: How much upward momentum does the U.S. stock market have?

Of course, from a rational point of view, although the S&P 500 index hit a record high again this week after nearly two years, many people in the industry have actually become more cautious now - even after Friday's rise, the S&P 500 index rose only 1.5% in January. In comparison, the index rose for nine consecutive weeks after the end of October last year, with a cumulative increase of 16%.

On Friday, the S&P 500 index actually appeared unstable in the last period of its run when it hit a record high. Some analysts also pointed out that whether U.S. stocks can rise further will depend on how the Federal Reserve walks the tightrope.

Jurrien Timmer, global head of macro at asset management company Fidelity, said, "A soft landing in the economy is a difficult thing to do, which is why soft landings rarely occur in history. There are many factors that can cause this perfect 'Goldilocks' model to be broken."


David Kelly, chief global strategist at J.P. Morgan Asset Management, also pointed out, "A lot of new economic data recently have caused the market to lose some momentum. I think the environment for the stock market is relatively good, but don't expect there to be a big rise this year." He added, "The S&P 500 index hitting a new record high is actually of little significance now, because the motivation to push us across the finish line has weakened. The Nasdaq Composite Index, which is dominated by technology stocks, is still below its previous closing record level."

Many investors said that while they have not changed their long-term assumptions of falling interest rates and healthy corporate earnings growth, new economic data may be enough to cool the market rebound after a surge in the final months of 2023.

Brett Nelson, head of tactical allocation at Goldman Sachs Private Wealth Management, pointed out that after the S&P 500 ended 2023 with nine consecutive weeks of gains, it would be unsustainable for the market to continue to rise at the same rate. In the short term, some "indigestion" may lead to market sideways or pullbacks. Of course, the market could rise further throughout the year as "fundamentals will eventually prevail."

The main risks facing U.S. stocks still lie in excessive market concentration and valuation.

For the tenth month in a row, respondents in the latest Bank of America fund manager survey ranked holdings in the "Big Seven" stocks as the most crowded trade in the market. Many say the stocks' sharp gains have made them look too expensive compared with the rest of the market. The average forward price-to-earnings ratio for these seven stocks this week is about 33 times, while the S&P 500's overall forward price-to-earnings ratio is about 19.6 times.

According to LSEGDatastream, the S&P 500's forward price-to-earnings ratio currently hovers around 20 times, well above the long-term historical average of 15.6 times. Brent Schutte, chief investment officer of Northwestern Mutual Wealth Management Company, said in a commentary published earlier this month that judging from the current valuation level, the market has a high threshold for further substantial gains this year.