Record Highs for US Stocks as Economy Rebounds: A Layman’s Insight

US stock markets, like the S&P 500 and Dow Jones, soared to all-time highs on Friday, boosted by technology companies and growing optimism about the economy. The S&P 500, tracking big American companies, jumped 1.2% to close at 4,839.8, surpassing the previous record set in January 2022. This remarkable recovery comes two years after a market downturn triggered by concerns about inflation and economic uncertainties.

As inflation worries ease and economic threats diminish, investors are rushing back into the stock market. The Dow Jones Industrial Average, reflecting the overall economy, hit a new record late last year and rose another 1% on Friday. The Nasdaq, where many tech firms are listed, also surged 1.7%, although it’s still about 4% below its peak in 2021.

For Wall Street, this new S&P record officially signifies a “bull market,” with shares rebounding by 35% since the low in October 2022. Investors are optimistic that the US central bank, which raised interest rates in 2022, may soon shift its strategy to lower borrowing costs, benefiting companies and further boosting stock prices.

Technology companies, buoyed by expectations of artificial intelligence advancements, are also contributing to the market’s positive trend. The positive sentiment extends beyond Wall Street, reaching the public as retirement and investment accounts recover, gas prices drop, and overall price increases slow down.

The University of Michigan’s consumer sentiment survey reported the highest level since 2021, indicating a 21% increase from a year ago. Consumers are gaining confidence with the belief that inflation is under control, and income expectations are strengthening. This two-month increase in sentiment is the largest since 1991, reinforcing the idea that the economy is on a positive trajectory.

Source: [BBC]

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