S&P 500 Hits 'All-Time High' in Liquidity... "Fastest Escape from Bear Market"

Tech Stocks Lead Strong Bull Market Continuation... Nasdaq Hits Record Highs Consecutively
US Congress Stimulus Negotiations to Decide Market Direction
Safe Assets Diverge... Gold Recovers to $2000, Dollar Index Hits 2-Year Low

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] "The S&P 500 index has bid farewell to the shortest bear market in history."

The U.S. New York stock market, which had collapsed due to the novel coronavirus infection (COVID-19), has revived thanks to liquidity supply and expectations for corporate earnings. Centered on technology companies, the S&P 500 index quickly entered a super bull market, reaching an all-time high.

According to Bloomberg on the 18th (local time), the S&P 500 index on the New York Stock Exchange (NYSE) closed at 3,389.78, up 0.23% (7.79 points) from the previous day. This surpassed the all-time high of 3,386.15 set on February 19 before the COVID-19 outbreak, fully recovering the stock prices that had plummeted in March due to the severe impact of COVID-19.

The Wall Street Journal (WSJ) explained, "It took 126 trading days from the February peak to this high, marking the fastest recovery from a bear market." The previous record was 310 trading days in 1967.

Despite the ongoing spread of COVID-19, the U.S. stock market continues its bull run due to liquidity supply ignited by the Federal Reserve (Fed). The Fed expanded liquidity by purchasing corporate bonds and lowering the benchmark interest rate to near zero, while the yield on U.S. Treasury bonds, a representative safe asset, declined, attracting money into the stock market.

Jeff Buchbinder, a market strategist at LPL Financial, a U.S. financial services company, explained, "Too much money has entered the system, and much of it has found a place in the stock market." Sam Stovall, chief investment strategist at market research firm CFRA Research, said, "Wall Street focuses on the future. There are massive monetary and fiscal stimulus measures, and belief is growing that pharmaceutical companies will soon develop a COVID-19 vaccine."

Strong earnings from technology companies are also driving the U.S. stock market into a super bull market. Amazon, Alphabet, Facebook, Microsoft (MS), and Apple account for about 25% of the S&P 500's market capitalization, and the rise of these tech stocks is lifting the S&P 500 index. WSJ explained that the tech-heavy Nasdaq index has risen 25% this year alone, setting 34 all-time highs. On this day, Nasdaq closed at 11,210.84, up 0.73% (81.12 points), breaking its all-time high again following the previous day.

However, whether this super bull market will continue remains uncertain. The pace of earnings recovery varies by company and industry, and uncertainty remains over the U.S. Congress's stimulus package negotiations. Negotiations between the White House, Republicans, and Democrats over the size of the stimulus package are deadlocked, and conflicts have worsened without finding a resolution. However, foreign media reported that the Democrats expressed a willingness to reduce the stimulus size, leaving room for a deal with the administration.

On this day, major U.S. retailers such as Walmart and Home Depot announced second-quarter earnings that exceeded market expectations. However, since these earnings are based on government stimulus measures, there are forecasts that future earnings could worsen depending on the direction of additional stimulus packages. When Walmart stated that it is monitoring the results of the new stimulus package negotiations in Congress, both Walmart and Home Depot shares closed lower. The Dow Jones Industrial Average closed at 27,778.07, down 0.24% (66.84 points) from the previous session.

Meanwhile, safe-haven assets showed mixed movements. International gold prices recovered to the $2,000 level after a week. On the New York Mercantile Exchange, the December delivery gold price closed at $2,013.10 per troy ounce, up 0.72% ($14.40). The dollar index fell 0.6% from the previous day to 92.2710, marking its lowest level since May 2018.

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