S&P500 Sets a New Record, Investors Lift the Global Stock Market

S&P500 Sets a New Record, Investors Lift the Global Stock Market

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Key Takeaways

• S&P500 rallies to a new high in the closing hours of Friday’s trading session
• Investors pile into global equities in hopes the economic recovery will remain robust

The broad-market S&P500 climbed to another record high on Friday, extending its Thursday gains. Moreover, global stocks hit an all-time high, lifted by investors’ expectations that the economic recovery will continue to ascend.

The S&P500 ended last week notching a fresh high and sealed a third straight week of continuous gains. The dominant equity gauge floated near the flatline for most of the day. In the late hours, market participants piled into the index and pushed it higher by 8.26 points, or 0.19%, to 4,247.44. The Dow Jones Industrial Average ticked higher by 13.36 points, or 0.04%, to 34,479.60. The tech-focused Nasdaq Composite jumped by 49.09 points, or 0.35%, finishing the session at 14,069.42.

In Europe, markets continued their robust recovery for another day on Friday. All major European indexes ended in the green, as well as the pan-continental Stoxx Europe 600, which finished at an all-time high. UK’s FTSE100 closed higher by 0.65%, while Germany’s DAX gained 0.78%. France’s CAC40 advanced 0.83%, and Spain’s IBEX35 popped 0.78%. Momentum in Europe has remained strong for a fourth consecutive week in which the region-wide Stoxx 600 has climbed to new highs.

A Positive Outlook for Europe

The latest rally in the European markets was prompted by the ECB’s positive outlook for the economy. On Thursday, the European Central Bank upgraded its growth forecast. In a press conference, ECB President Christine Lagarde said she expected the gradual reopening across Europe to continue. Easing of lockdowns, rising vaccination rate, and monetary stimulus, according to Ms. Lagarde, will keep fueling the growth outlook for the old continent.

The ECB vowed to maintain the pace of its bond purchases despite the increasing prospects of higher inflation pressures. ECB President Lagarde said the central bank will accelerate its asset-buying under its €1.85tn program at least until September. She resisted calls from policymakers to scale back some of the asset purchases as the economy is growing quicker than expected. In contrast, Ms. Lagarde said it was “too early” to consider easing monetary policies. The European Central Bank has €700bn left of the overall €1.85tn pandemic emergency purchase program (PEPP). The program, intended to last until March 2022, is the main crisis-fighting tool of Europe. The central bank has been buying assets worth at least €20bn a month for over a year.

Over to the US, later in the week, traders and investors will be closely monitoring the Federal Reserve meeting. US policymakers recently began talking about trimming the $120bn of bond purchases per month. Fed Chairman Jerome Powell is due to appear in a press conference later in the week where he will discuss Fed’s approach to the heating economy. Analysts expect that Mr. Powell will remain rather tight-lipped about tapering.

Rising inflation in the US couldn’t spook investors this time around. May’s inflation data did little to derail the rally in equities, unlike April’s data, which roiled the financial markets. Data on Thursday showed headline consumer price inflation in the US rose 5% in the last 12 months, the largest increase since 2008.