The most influential U.S. stock index hit an all-time high on Monday, topping the 2,000 mark for the first time ever.
The S&P 500 is a list of 500 of the most important publicly traded companies. Known as the benchmark index, it is more closely followed in the financial world that the Dow Jones Industrial Average, which follows only 30 blue-chip companies. The S&P 500 is regarded as the better representation of the health of the market.
The index topped 2,000 for the first time ever, briefly inching above the level in Monday morning trading before dropping back down around 1,998. The 2,000 mark is not particularly significant aside from being a large, round number.
The new high, however, does draw attention to a particularly strong run for the S&P 500. The index is up more than 20% in the past 12 months, up 40% in the past two years and 70% higher in the past three years.
That kind of growth is encouraging, although market skeptics believe that stocks are overvalued at current levels, partially due to intervention by the Federal Reserve, the central bank of the U.S.
There are no small number of factors to consider when discussing the reasons for the S&P’s success. The U.S. economy is broadly considered to be on the upswing following strong employment reports and GDP growth.
One the downside, international unrest like the situations in the Middle East and Ukraine can spook investors and cause them to flee stocks, which are generally considered a higher short-term risk, for other options like bonds (investments in short-term or long-term debt).
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