Is the S&P 500 reaching the 2,000 milestone cause for celebration?
The S&P 500 Index closed above 2,000 for the first time this week—a milestone that was long in the making, and one that offers psychological support to the market. But the real significance of this new record remains to be seen in what follows it. And that, at this point, is a toss-up.
There are those who argue this milestone is confirmation that the market is in the first stages of a 20-plus-year bull run. Speaking to CNBC, Chris Hyzy, U.S. Trust's chief investment officer, said that the economy is in an “elongated business cycle” where opportunities abound ahead. The S&P 500 at 2000 is, in his view, only in year five of a 20-year run.
Plenty agree with Hyzy. MarketWatch columnist Mark Hulbert, quoting a well-respected market timer today, suggested that an 8 percent move for the S&P to 2,150 by year-end is next. Hulbert pointed out that a low-interest-rate environment is at the core of this near-term outlook, but even so, a higher S&P 500 is looking likely.
“In a nutshell, there is no significance to the S&P 500 at 2,000; it’s just a number,” Rob Stein, CEO of Astor Asset Management, told ETF.com. “As long as the economic fundamentals continue at their current readings, the expected returns for equities remain higher. The risk of a significant allocation to risk assets like stocks is worth the expected return."
But there’s plenty of doubt. Consider, for example, that retail investors have largely chosen not to climb the proverbial “wall of worry” since the stock market bottomed out on March 9, 2009 after the dual shocks of $147-a-barrel crude oil prices and the subprime mortgage crisis together brought the global economy to its knees.
With that in mind, here are three things to consider about S&P’s milestone: