S&P 500 Index climbs above 4,000, further upside ahead – UBS


The S&P 500 Index breached the 4,000 milestone last week, continuing a remarkable recovery from last March’s pandemic low. The extent and pace of the rally may be causing some investors concern about its sustainability. But both historical experience and current US economic and policy conditions suggest the rally has further to run, according to economists at UBS.

History suggests investors need not be concerned by record S&P 500 highs

“All-time highs are no barrier to further gains. In fact, based on data going back to 1960, stocks have performed slightly better than average after hitting all-time highs. Our analysis shows that after reaching a fresh high, stocks rose another 11.7% in the following 12 months, compared with 11.3% from levels below record highs.”

“Rising nominal yields and equity rallies tend to go hand in hand. In the past 25 years, there have been 10 periods in which the US 10-year bond yield has risen by more than 100bps. And in all instances, global equities delivered flat or positive returns. Also, the current rise in yields is being driven more by a stronger growth outlook than concerns over monetary policy tightening.”

“Perfect market timing has little benefit. An investor putting USD 1 of their monthly paycheck into the S&P 500 since 1945 would have grown their portfolio to $253,645 if they had put the cash to work straight away each month. That investor would have secured $261,699 (or a paltry 0.03% more per year) if they had timed the market perfectly by only investing at levels the market never subsequently dropped below.”

“Current US economic and policy conditions provide further support for equities. The US labor market continues to recover as re-opening supported by the vaccination program underpins a rebound in service sectors.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Get Weekly Crypto trade ideas!  
Empower yourself with the best market insights

Join FXStreet Premium!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD slips below 1.2050 amid dollar strength

EUR/USD is trading below 1.2050, losing some of its gains as the dollar shrugs off the fresh drop in yields and rises. European regulators said the benefits of J&J's vaccine outweigh the risks.

EUR/USD News

GBP/USD retreats from 1.40 despite upbeat UK job figures

GBP/USD is extending its falls after retreating from 1.40 as the dollar edges higher. Earlier, the UK reported a drop in the unemployment rate to 4.9%, better than expected. The Claimant Count Change also beat estimates with 10.1K. 

GBP/USD News

XAU/USD tests key Fibo resistance at $1,775

XAU/USD rebounds after closing in the negative territory on Monday. 10-year US Treasury bond yield is edging lower on Tuesday. Additional gains are likely if gold manages to clear $1,775 resistance.

Gold News

Ethereum price on cusp of massive breakout if key level holds

Ethereum price had a significant 23% correction in the past week but holds above a key support level on the 12-hour chart. The digital asset still has robust on-chain metrics supporting it and aims for a rebound.

Read more

S&P 500 (SPX) Update: Equity markets take a well deserved breather, crypto stocks slide

Equity markets took a much-needed break from setting record highs on Monday. Tesla suffered a steep 5% fall after reports of a crash with no one at the wheel. Have a Coke and a smile was up 1% as KO smashed earnings estimates.

Read more

Forex MAJORS

Cryptocurrencies

Signatures