Current:Home > StocksThe S&P 500 hit a new record. Why the milestone does (and does not) matter for your 401(k)-LoTradeCoin
The S&P 500 hit a new record. Why the milestone does (and does not) matter for your 401(k)
View Date:2024-12-23 19:21:48
The S&P 500 has hit yet another milestone this year, ending above 5,000 for the first time on Friday.
It’s good news for Americans’ 401(k)s, which are heavily invested in stocks, and comes just three weeks after the index notched its first record close since January of 2022.
Tom Hainlin, national investment strategist at U.S. Bank Wealth Management, called the record a "symbolic milestone."
"It's a big, round number," he told USA TODAY. "It's a record high. But I think for the average person with a 401(k), it still suggests that the economy seems to be doing well."
Why is the S&P 500 up?
The S&P 500 closed Friday at 5,026.61, up 0.57%.
The market’s performance has been bolstered by signs that the Federal Reserve has ended its rate hikes and may cut rates this year. Excitement around artificial intelligence advancements has also pushed up companies’ stock prices.
“We've gone through a pandemic ... We're in two wars. And yet, there just tends to be a gravitational pull upward over the longer-term" for stocks, said Kristina Hooper, chief global market strategist at investment management company Invesco, who also noted that surging interest rates have been a challenge over that time.
Economists are coming for your 401(k):Here's why they say the accounts aren't worth it
Why should I care about the S&P 500?
So is this a big deal for Americans holding investments in a 401(k) retirement plan?
Yes and no.
The S&P 500, an index that includes 500 leading publicly traded companies, is regarded as one of the best gauges of Wall Street's health. When the benchmark index goes up, Americans' 401(k)s tend to go up as well.
“It's a broad group of very important stocks,” said Stephen Suttmeier, Bank of America’s chief equity technical strategist.
But while the 5,000 milestone is making headlines, experts say it may not sustain that level for long.
The first few months of an election year are “pretty choppy” for markets, according to Suttmeier. Similar milestones in the past have been followed by dips, which means it may take some time before the index finds its footing above the 5,000 mark.
“My guess is we should be able to pass 5,000 meaningfully. But I don't think we surpass 5,000 meaningfully within the next three, four months,” Suttmeier said, adding that he doesn't find Friday's milestone to be "all that significant."
But even if the index does fall, Hooper said the milestone is a sign of the market’s resiliency, noting that the S&P 500 has already doubled since surpassing 2,500 in September of 2017.
“I think more than anything else, this is a symbolic event that reminds investors of the importance of staying invested,” she said.
Some strategists say the milestone could provide a psychological boost for the market.
'A psychology milestone' for the S&P 500
Adam Turnquist, chief technical strategist for LPL Financial, noted that the S&P 500's performance following nine other major milestones has generally been positive, with a 12-month average return of 10.4%.
"Round numbers such as 5,000 often provide a psychological area of support or resistance for the market," Turnquist said in emailed commentary.
Ryan Detrick, chief market strategist at financial services firm Carson Group, echoed that sentiment.
"Although on the surface there is nothing special about 5,000 vs 4,999, it is more of a psychology milestone for investors," he said.
Where did the Dow Jones Industrial Average close?
The Dow Jones Industrial Average closed at 38,671.69 Friday, down 0.14%.
What about the Nasdaq?
The Nasdaq closed at 15,990.66, up 1.25%.
veryGood! (9)
Related
- Today’s Savannah Guthrie, Al Roker and More React to Craig Melvin Replacing Hoda Kotb as Co-Anchor
- Travelers through Maine’s biggest airport can now fly to the moon. Or, at least, a chunk of it
- Smuggling suspect knew of frigid cold before Indian family’s death on Canada border, prosecutors say
- Influencer Jackie Miller James Shares Aphasia Diagnosis 10 Months After Aneurysm Rupture
- Cowboys owner Jerry Jones responds to CeeDee Lamb's excuse about curtains at AT&T Stadium
- Who should be the NBA MVP? Making the case for the top 6 candidates
- DJT had a good first day: Trump's Truth Social media stock price saw rapid rise
- If you see this, destroy it: USDA says to 'smash and scrape' these large invasive egg masses
- Whoopi Goldberg Shares Very Relatable Reason She's Remained on The View
- Trader Joe's raises banana price for the first time in more than two decades
Ranking
- New Mexico secretary of state says she’s experiencing harassment after the election
- Who are Sean 'Diddy' Combs' children? Family tree as mogul faces assault claims, raids
- McDonald's to start selling Krispy Kreme donuts, with national rollout by 2026
- Nevada Supreme Court will take another look at Chasing Horse’s request to dismiss sex abuse charges
- Bridgerton's Luke Newton Details His Physical Transformation for Season 3's Leading Role
- When does 'American Horror Story: Delicate' Part 2 come out? How to watch new episodes
- Court tosses Republican Pennsylvania lawmakers’ challenge of state, federal voter access actions
- California Man Arrested After Allegedly Eating Leg of Person Killed by Train
Recommendation
-
Certifying this year’s presidential results begins quietly, in contrast to the 2020 election
-
Geoengineering Faces a Wave of Backlash Over Regulatory Gaps and Unknown Risks
-
Former state senator Tom Campbell drops bid for North Dakota’s single U.S. House seat
-
Texas AG Ken Paxton reaches deal to resolve securities fraud charges before April trial
-
California Gov. Gavin Newsom will spend part of week in DC as he tries to Trump-proof state policies
-
Sean ‘Diddy’ Combs’ lawyer says raids of the rapper’s homes were ‘excessive’ use of ‘military force’
-
Unlock Your Inner Confidence With Heidi D'Amelio’s Guide to Balance and Self-Care
-
Jason Dickinson scores twice as the Chicago Blackhawks beat the Calgary Flames 3-1