US equity benchmark S&P 500 Index hit a lifetime high of 7,000 points for the first time on Wednesday, ahead of the Federal Reserve’s monetary policy decision and quarterly earnings from major tech companies. On a 12-month basis, the index has gained 15%, and 2% year-to-date.
The blue-chip index had scaled to 6,000 on Nov. 11, 2024 after the victory of Donald Trump in the US presidential election. That was preceded by the 5,000-mark milestone on Feb. 9, 2024 — the thousand-point move came after a nearly three-year wait.
The 14-month journey from 6,000 to 7,000 of the S&P 500 has been anything but smooth. The period saw a bruising tech selloff sparked by Chinese artificial intelligence startup DeepSeek in January last year, ‘Liberation Day’ tariffs unleashed by Trump in April and the consequent US-China trade war, federal government shutdown in October, lingering geopolitical tensions over Russia, Iran, Greenland and Venezuela, and Fed policy.
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Gainers And Losers
Sandisk Corp. emerged as the standout performer, soaring an extraordinary 1,350% on a 12-month basis, far outpacing all other constituents in the index. It was followed by data storage company Western Digital Corp., which posted a remarkable 480% gain, and memory-chip maker Micron Technology Inc. that rose 390% during the same period.
In contrast, digital advertising firm Trade Desk Inc. suffered the sharpest drop, falling 73% over the past year. Gartner Inc., Deckers Outdoor Corp., GoDaddy Inc. and Lululemon Athletica Inc. each declined over 50%.
All eleven sectoral indices on the S&P have given positive returns on a 12-month basis. The S&P 500 Communication Services has surged 28%, followed by 26% for Information Technology and 19% for Industrials. Consumer staples has been up by 7% while real estate has been flat.
NVIDIA Corp. became the first public company to reach a market capitalisation of $5 trillion, though it wouldn’t hold that level.
The MSCI World ex-USA index gained 31%, outpacing the S&P 500 by the widest margin in over three decades. Emerging markets fared even better than developed markets, with the MSCI Emerging Markets index rising 40%. Global equities, as measured by the MSCI All Country World Index, rose 21% in the last 12 months.
A trader during market hours at the New York Stock Exchange.
Photo Credit: Image: NYSE/ X
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Going Ahead
An average of S&P 500 year-end targets from ten of the most prominent Wall Street firms indicates a 9% upside, roughly in line with the average total return this century. It would trail the prior three years, when the benchmark churned out returns of 24%, 23% and 16%.
The bull case is predicted on expectations that the world’s largest economy will pick up steam in the first half, with tax cuts and regulatory easing adding to an ongoing boost from the AI buildout. The tempering of expectations comes from continued worries that valuations remain high and capital spending plans could start to weigh on profits. The midterm elections for the US House of Representatives and Senate will also be an important factor for equities.
Not the least, Trump’s volatile economic and geopolitical policies are expected to continue to impact the markets.
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