As the S&P 500 has exploded above key resistance at 3300 for the first time in its history, investors are now wondering if the rally will continue to unheard of all-time highs by year end. Experts are saying there’s still a long way to go and plenty of room for growth as the US economy continues its strength and momentum despite the pandemic.
To understand what is likely to happen in the short-term, investors need to consider the key factors driving the markets forward. Firstly, the overall strength of the US economy is being bolstered by the historically high $2.2 trillion in stimulus handed out to households and businesses at the start of the year. These measures have been largely successful for helping stimulus sectors like retail and housing.
Added to this, the Fed has been providing further support with its asset purchasing program and low-interest rate policy. The low-interest rate environment is a further boon for equity markets and consumers as it means it is cheaper to borrow and invest. This essentially is helping to drive the ongoing bull run and provides easy money access to push the stock indices further.
In terms of broader economic conditions, the global economic recovery is also likely to play a key role in the stock markets further development. The US is leading the way as Europe and other regions are yet to show signs of real recovery. This will be a key factor in maintaining the markets current bullish trend.
In addition to these factors, investor sentiment is also turning more positive as we move into the end of the year. Improved vaccine news, particularly from Moderna, is restoring some confidence in the market’s outlook and helping to drive the rally higher.
It is clear that there are still many factors to consider when determining the direction of the markets and whether the S&P 500 can reach all-time highs by the end of the year. It is likely that these will all help to boost the market, however, the key factor will be the sustained strength of the US economy.
As long as the US economic recovery remains on track and vaccine news continues to be positive, it is very likely that the markets will be set to challenge the all-time highs by the end of the year.