New York Stock Market, S&P 500 Closes at All-Time High... "Fastest Recovery from a Bear Market"

Closed at 3389.78, up 0.23% on the 18th... "126 trading days from February peak to this day"
Dow down, Nasdaq closes at record high... Focus on corporate earnings, economic indicators, and stimulus package negotiations

New York Stock Exchange, USA
Photo by Reuters Yonhap News

[Asia Economy Reporter Jeong Hyunjin] On the 18th (local time) at the New York Stock Exchange, the S&P 500 index fully recovered losses caused by the novel coronavirus disease (COVID-19) and surpassed the all-time high recorded in February. Despite US-China tensions and difficulties in negotiating additional US stimulus packages, optimism that the economy will recover appears to be driving the market upward.

At the New York Stock Exchange (NYSE), the S&P 500 index closed at 3,389.78, up 0.23% (7.79 points) from the previous day. This surpassed the previous record of 3,386.15 (February 19), fully recovering the stock prices that plummeted in February and March due to the impact of COVID-19.

The market attributed the new S&P record to the Federal Reserve's intervention, lowering the benchmark interest rate to zero (0%), which attracted funds into the stock market, and the additional rise in the stock market due to falling government bond yields. In particular, Amazon, Alphabet, and Facebook, which make up about 25% of the S&P 500, pulled the index upward.

The Wall Street Journal (WSJ) explained, "It took 126 trading days from the February peak to this peak, marking the fastest recovery from a bear market."

The market showed mixed trends, focusing on major companies' earnings, economic indicators, and stimulus package negotiation news. The Dow Jones Industrial Average fell 0.24% (66.84 points) to 27,778.07, while the tech-heavy Nasdaq index rose 0.73% (81.12 points) to 11,210.84. The Nasdaq broke its all-time high for the second consecutive day.

On this day, leading US retail companies such as Walmart and Home Depot announced better-than-expected second-quarter earnings. However, considering that these earnings were supported by government stimulus measures, concerns arose that the future performance of these companies could be affected depending on the outcome of the currently stalled additional stimulus package negotiations. Consequently, Walmart and Home Depot stocks both closed lower.

The US Department of Commerce also announced that new housing starts in July increased by 22.6% from the previous month to 1.496 million units, supporting the stock market's strength. Housing starts far exceeded the expert forecast of 1.24 million units, a 4.6% increase, compiled by WSJ.

However, uncertainty over the US additional stimulus package negotiations is causing market concerns. The White House, Republicans, and Democrats have failed to find a breakthrough in negotiations, intensifying conflicts. On this day, news emerged that the Republicans are reviewing a stimulus bill smaller in scale than initially proposed. Treasury Secretary Steven Mnuchin criticized the Democratic leadership for refusing to discuss reasonable proposals.

New York stock market experts pointed out that despite the S&P 500 index's record high, the outlook remains uncertain. According to CNBC, Andrew Sleiman, Director of Investment Management at Morgan Stanley, said, "There seems to be a lot of good news, but I believe the market is very vulnerable to negative news," adding, "Looking at the types of stocks that have risen, the risk is high."

Michael Hans, Chief Investment Officer (CIO) of Clafeldt Citizen Private Wealth, told MarketWatch, "Our feeling is that the easy gains are over," adding, "There were resilient consumers and the index reached an all-time high, but it is unclear whether improvements in consumption, the labor market, and economic activity can be sustained without ongoing monetary and fiscal stimulus." He added, "Stimulus policies will not last forever."

This content was produced with the assistance of AI translation services.