On Friday, the S&P 500 hit new closing and intraday highs for the first time in two years, marking a stunning rebound after a brutal sell-off in 2022.The rebound has been driven by the so-called "Big Seven" - Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN), Meta (META) and Tesla (TSLA) - and is largely based on investor expectations that artificial intelligence and cost cutting will drive profit growth at these companies.

Additionally, the Fed appears to have finished raising interest rates and is beginning to consider when to cut rates. The rising market expectations for an interest rate cut by the Federal Reserve are also an important driving force behind the rebound in U.S. stocks.

The following five charts illustrate the S&P 500's stunning rally.


From the previous record high in early January 2022 to the new record high last Friday, there was an interval of 512 trading days, which is the longest interval in more than ten years. However, historically speaking, the 512-day interval is not that long. In the 1970s, due to soaring inflation and stagnant economic growth, the S&P 500 did not hit a new high for more than seven consecutive years.


After reaching its previous record high in early January 2022, the S&P 500 fell to a closing low of 3,577.03 points on October 12, 2022, a loss of as much as a quarter. The sharp decline in the S&P 500 came as fast-growing technology companies were hit by rising interest rates, while the Russia-Ukraine conflict caused oil prices to soar above $100 a barrel and U.S. bond yields partially inverted. Since then, though, the index has added more than $10 trillion in market capitalization, rebounding from a violent sell-off in 2022.


Tech stocks have outpaced other sectors since S&P 500 bottomed

Information technology, communication services and consumer discretionary sectors have led the S&P 500's rebound in 2023, and these are also the sectors in which the "Big Seven" are located. In the first half of 2023, the S&P 500's seven largest companies outperformed the rest of the index, posting their best performance since the dot-com bubble burst in 2000. Among them, after rising by nearly 50% last year, Apple's market value once again exceeded US$3 trillion in December last year.


Nvidia became the largest contributor to the S&P 500's gains since October 2022, with the stock up more than 400%. Nvidia's performance guidance in May last year that significantly exceeded market expectations triggered the artificial intelligence craze, driving the stock to soar in 2023. It is followed by Royal Caribbean Cruises (RCL), AMD (AMD), Meta and Broadcom (AVGO).


S&P 500's worst performers since 2022 lows

In addition, affected by the regional banking crisis in the United States, First Republic Bank and Silicon Valley Bank were the two worst-performing stocks in the S&P 500 Index last year. First Republic was eventually acquired by JPMorgan Chase (JPM), and Silicon Valley Bank collapsed. Also experiencing larger declines during the same period were Lumen Technologies (LUMN.US), Advance AutoParts (AAP.US) and Enphase Energy (ENPH.US). The share prices of these three companies have all fallen by approximately 60% since October 2022. Most of these worst-performing stocks are no longer in the S&P 500.