The S&P 500 hit an all-time closing high Friday, reflecting the staggering gains of a coterie of Big Tech firms against the backdrop of a surprisingly stable economy.
The broad-based index closed at 4,839.81 ― up more than 1 percent for the day ― surpassing the previous closing record set in January of 2022.
The stock market surged upward in the final quarter of 2023 as evidence gathered that the economy has not tipped into recession territory, despite the Federal Reserve’s campaign to raise interest rates.
Voters’ feelings about the stock market and economy could affect the 2024 election, as President Biden and presumptive challenger Donald Trump will each have to defend their economic records. Trump predicted a market crash if he doesn’t win. Biden has already faced attacks from the right over inflation and gas prices, while his office has argued that he has both under control and pointed to a strong job market.
At the beginning of 2023, Goldman Sachs
placed the probability of a recession at 35 percent, bucking a much higher consensus estimate of 65 percent.
But a recession has yet to materialize. By November, when the S&P 500’s latest rally had begun, Goldman had lowered its probability estimate to 15 percent as it
declared the economy was “on its final descent” to a soft landing.
“The hard landing became a fictional Netflix documentary,” said Dan Ives, senior analyst at Wedbush Securities.
Now analysts see signs of a resilient economy. Inflation
dropped to 3.1 percent in November, far lower than its June 2022 peak and closer to the Fed’s 2 percent goal. The number of people seeking initial jobless claims
came in at 202,000 as of Dec. 14, reflecting a drop of 19,000 from the previous week, according to a preliminary estimate from the Labor Department. Consumer spending also held steady as it increased 0.2 percent in October.
