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S&P 500 Surges Past 5000: Bull Market Charges On, Fueled by Earnings, Inflation, and Economic Strength

GDP growth, low inflation, and great earnings.

The S&P 500 has breached the 5000 market, signaling the continued surge of the bull market. This surge is buoyed by positive inflation adjustments and by strong earnings. 

The government revised the December consumer price index (CPI) increase to 0.2% from the initially reported 0.3%. The core CPI, which omits food and energy prices, remained unchanged. Following these revised figures, Treasury yields saw a decrease. The CPI data for January is anticipated next week.

Leading the charge towards pushing the S&P 500 past the 5000 mark were Nvidia, Alphabet, and Microsoft (3 of the “Mag 7”), all showing additional gains on Friday.

The market’s rally into 2024 has been underpinned by a robust earnings season, softened inflation figures, and a steadfast economy, resulting in nearly a 5% increase in the S&P year-to-date. This uptrend is expected to contribute to yet another week of stock gains.

So far, 319 S&P listed companies have shared their quarterly earnings, with over 80% surpassing expectations, a significant increase from the typical 67% beat rate.

The forefront of this market leadership has been technology and innovation, exemplified by Cloudflare’s 27% surge post exceeding fourth-quarter expectations. On the flip side, the earnings season has seen its share of letdowns, with PepsiCo, Take-Two Interactive, and Pinterest all facing downturns due to mixed results and less-than-expected forecasts.

Cloudflare particularly stood out, with its shares leaping 27% after reporting adjusted earnings of 15 cents per share on $362 million in revenue for the fourth quarter.

The momentum in the market is driven by robust earnings, favorable economic indicators, declining inflation, strong consumer confidence, and a solid job market, presenting a limited number of obstacles for the economy and market growth. Nonetheless, factors such as consumer debt and rising interest rates could moderate economic expansion.

The current economic landscape exhibits remarkable resilience. Investors are focusing on future growth, emphasizing quality earnings and economic expansion. The key for investors is to stay data-driven, disciplined, and patient, maintaining a commitment to prudent risk management and sustainable investment strategies.

Key points:

  • S&P 500 crossed the 5000 marks, extending the bull market.
  • Revised December inflation data shows a smaller increase than initially reported (0.2% vs. 0.3%).
  • Strong earnings season with over 80% of S&P companies exceeding expectations.
  • A robust economy with positive indicators like consumer confidence and a strong job market.
  • Concerns still surround Consumer debt and rising interest rates that could moderate or slow economic growth.

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