The S&P 500 closed above 5,000 for the first time ever on Friday. This milestone came as the three major averages logged a positive week for the 13th time in the last 14 weeks. With few economic catalysts in the past week, investors focused on corporate results that generally exceeded expectations. Additionally, Federal Reserve officials reiterated the central bank’s stance on needing more confidence in inflation’s path downward. Looking forward, the week will bring new challenges to the market rally, as investors anticipate a fresh reading on inflation and consumer spending.
Corporate earnings announcements are also anticipated to affect the S&P 500 in the coming week. About 15% of the S&P 500 is set to report earnings, with companies like John Deere, Coinbase, Airbnb, and Shopify at the forefront. Financial analysts are eagerly awaiting the Consumer Price Index (CPI) for January, expecting an annual gain of 2.9% for headline CPI. Investors are also looking forward to the January retail sales report which is predicted to show a decline of 0.2%. Overall, investors remain optimistic about the market rally despite potential challenges in the coming week.
As earnings season continues, 75% of S&P 500 companies have reported their earnings, indicating a positive trend in the benchmarks. Companies are beating earnings estimates at the highest rate in two years, signaling potential for continued earnings growth. Economists and financial analysts remain bullish on the future outlook for the S&P 500, predicting further earnings growth over the next two years. This growing earnings breadth has historically been seen in the early stages of recovery from major cyclical downturns, suggesting strength in the market moving forward.