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The surge to the record high as seen in the S&P 500 was undeterred by inflation fears.
The continuous positive earnings report from Wall Street has pushed the S&P 500 (INDEXSP: .INX) to a new record high of 4,549.78, after inching a daily gain of 0.30%. The S&P 500 growth is a testament to the broad market health, evident by a move from 4,300.46 on October 1 to the point it is today.
The uptrend momentum was picked up by the Nasdaq Composite (INDEXNASDAQ: .IXIC) which added 94 points atop a 0.62% gain to 15,215.70. The Dow Jones Industrial Average (INDEXDJX: .DJI) took a diverse turn, dropping 0.018% to 35,603.08. The negative slip from the Dow Jones was stirred by the sharp decline in the shares of IBM (NYSE: IBM) by 9.56% to $128.33 per share.
The broader market has experienced a rejuvenation which has stirred a multi-day uptrend in the S&P 500 as optimism on the potentials of the stock market to stand on its feet after the Fed’s bond purchases is withdrawn.
According to Liz Young, head of investment strategy at SoFi Technologies Inc (NASDAQ: SOFI), the end-of-year rally in the broader market cannot be ruled out but the earnings from this point onward will need to come in consistently and positively across the board.
“We’re in this precipice of handing the baton from policy back to company fundamentals,” she told CNBC’s “Squawk Box” Thursday. “That’s going to be a little bit bumpy, but it’s like watching a baby try to walk. If we hold it up the whole time we’re going to delay its progress, so you have to let the market fall down and know it’s not going to get hurt, and have it find its own balance.”
S&P 500 Record High Undeterred by Inflation Fears
The surge to the record high as seen in the S&P 500 was undeterred by inflation fears. The correlation between inflation and corporate profits according to Jim Paulsen of the Leuthold Group has remained positive for more than 20 years, a trend that is sure to keep the confidence amongst investors intact.
“Investors are understandably concerned about reports that inflation pressures are eroding profit margins and what that may mean for the stock market,” he said in a note Thursday. However, “elevated inflation appears to bolster S&P 500 EPS on the whole.”
The broad rally was also impacted by the improving job data released by the Department of Labor. Jobless claims notably fell to a pandemic low of 290,000 in the past week. This figure is remarkably lower than the 300,000 projected by economists polled by Dow Jones.