S&P 500 Record High Hit in Today’s Trading

An S&P 500 record high was hit today (Tuesday) as the broad-based benchmark touched 1,900 for the first time ever.
S&P 500 hits record high
The index gave back some gains after hitting the milestone just before noon. But it was still up 0.04% at 1,897.40 with less than an hour left in today's trading session.

The record high followed the S&P's ninth record close of 2014 notched Monday. The S&P 500 has been on a tear lately. It's been hitting recent records much more frequently than before.

It took the closely tracked index just 171 days to trek from 1,800 to 1,900. In comparison, after the S&P 500 leapfrogged the 1,500 mark in March 2000, it took the index 13 years of ups and downs before it surpassed the 1,600 line. After hitting that level just over one year ago, it has climbed nearly 19%.

Tuesday's record was a surprise in light of lackluster retail sales data posted today. The Commerce Department reported that retail sales eked up an uninspiring 0.1% in April. That was well short of forecasts for a 0.4% rise. Still, economists remain optimistic that Q2 2014 will show strong growth in the U.S. economy.

Several industry experts share that confidence.

"We've had a stealth rally in the market to this record," Eric Marshall, a portfolio manager at Hodges Funds in Dallas, with some $2 billion under management, told Bloomberg. "The fact that we've moved up and hit new highs, in spite of some lingering negative sentiment, is a very healthy and positive thing for the market."

Rob Stein, chief executive officer of Chicago-based Astor Investment Management, says the stock market is slowly returning to normal, logging solid gains and displaying a pickup in momentum after an unrelenting period of uncertainty in the wake of the 2008 financial meltdown and subsequent Great Recession.

"It would not be surprising for volatility to pick up," Stein, a former U.S. Federal Reserve analyst, told the Associated Press "But that doesn't take away from the fact that the economic fundamentals are supportive of equity prices."

Driving the benchmark higher recently is a flurry of M&A activity and a healthy IPO calendar. Also fueling gains are signs of a steady economic recovery and tame (government-reported) inflation.

So, what's next?

"I think there is a general feeling we are currently in a 'sweet spot,'" Bill Hornbarger, chief investment strategist at Moneta Group, a consistently top ranked Registered Investment Advisory Firm, told USA Today. "The economy appears to be improving after the brutal winter weather. But with inflation and inflation expectations still muted, the [Federal Reserve] will keep rates low [despite the tapering of its bond purchases] for an extended period going forward. Little pressure on bond yields globally and equity valuations while not cheap, aren't too expensive. Earnings are coming in OK despite tepid revenue growth, giving investors confidence."

While no one expects a repeat of last year's robust 25% rise in the S&P 500, most market analysts remain modestly bullish for the rest of 2014.

According to a fresh CNN Money poll, 26 investment strategists surveyed in early April have an average year-end S&P 500 target of 1,968. That would amount to a 6.5% yearly gain, up a tad from what experts predicted back in January.

But it wouldn't be unusual for markets to take a breather after Tuesday's milestone.

To be prepared for a post-record-high pullback, read how to protect yourself from a stock market correction.

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