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Rising inflation affects the stock market, etc.
Rising prices are scaring investors. Here we explain how inflation works, how it affects investments like stocks and funds, and how to protect your money.
On Monday, the S&P 500 pushed further into record territory, which was welcome news for Americans’ retirement accounts.
After hitting a record close since January 2022 on Friday, the benchmark index continued its gains on Monday, closing at 4,850.43, up 0.22%. The Dow Jones Industrial Average, which surpassed its 2022 high last month, ended the day above 38,000 for the first time, while the Nasdaq Composite Index rose 0.32%.
The milestone follows the stock market’s steep decline in 2022, the worst year for Wall Street since the Great Recession. At the time, investors worried about high inflation, high interest rates and the possibility of a recession, and the S&P 500 index fell about 20%.
“It took more than two years, but the S&P 500 is finally at a new all-time high,” Ryan Detrick, chief market strategist at financial services firm Carson Group, told USA TODAY on Friday. “This is a great reminder to investors that we’ve seen a lot of concern and concern over the past two years, but investors usually get rewarded over time.”
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Why is the stock market rising?
Tech stocks helped push the index to new heights.
Sam Stovall, chief investment strategist at investment research and analysis firm CFRA Research, said tech companies have managed expectations well in recent quarters. He said investors may now believe Wall Street is “underestimating the growth we’re going to see” from semiconductors and other tech stocks.
S&P 500 all-time high: Wall Street hits record high after two years of back-and-forth scarred by inflation
What is the all-time high of the Dow Jones?
The Dow Jones Industrial Average ended Monday at a record high of $38,001.81, up from Friday’s $37,863.8.
What is the all-time high for the S&P 500?
The S&P 500, widely used as a benchmark for large-cap stocks and index funds, closed at 4,850.43 on Monday, after closing at 4,839.81 on Friday.
What does this mean for me and my 401(k)?
The S&P 500 Index’s new record high is giving investors a boost in their retirement plans. This also shows investors’ confidence in the future of the economy.
Detrick pointed to signs including strong consumer spending, a healthy labor market, slowing inflation and expectations that the Federal Reserve will begin lowering interest rates before the end of the year.
Stovall added that investors won’t buy if they believe the economy is heading into a recession. (According to a recent study by Wolters Kluwer Blue Chip Economic Indicators, forecasters say there is a 42% chance of a recession this year, although this is lower than previously expected. , remains a historically high risk.)
But “markets tend to move higher when investors and analysts think there is a chance of recovery,” Stovall said. “(It’s) essentially saying, ‘We think better times are ahead.'”
Stovall said if high inflation and interest rates prove to be more stubborn than expected, the stock market could suffer, but if stock market trends to date are followed, the current rally could continue. He said it was highly sexual.
“Markets don’t tend to get exhausted and just roll over and die,” he said. “After regaining everything they lost, they tend to rise another 5.2% over two-and-a-half months, followed by an average decline of 8.2%.”
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