The S&P 500 index, often considered the benchmark of American stock market health, has achieved a significant milestone in 2020 and is now well into the 4500 range. However, the question on the minds of investors and market-watchers is whether or not the index can push above 4600 before the end of the year.
Experts are divided in their opinion on the matter. While some argue that the current momentum and favorable economic conditions will keep pushing the S&P 500 onwards and upwards, others caution that the gains seen in 2020 will be difficult to sustain heading into 2021.
Favorable economic conditions and growing investor confidence are both strong drivers of the S&P 500’s recent growth. Low interest rates and a recovering jobs market are buoying consumer confidence and encouraging retail sales, which in turn have given stocks a healthy boost.
On the other hand, a second wave of the COVID-19 pandemic has some investors feeling cautious about buying into stocks at these lofty levels. However, the efficacy of the vaccine and other treatments such as plasma therapy have some investors feeling much more confident about the direction of the market.
The Federal Reserve’s commitment to do whatever it takes to support the US economy has also been a major driver in boosting investor confidence. Federal Reserve Chairman Jerome Powell has made it clear that the Fed is committed to propping up the economy via low interest rates, and this has given investors the assurance that the US stock market is on a relatively safe path.
Nevertheless, there are still numerous potential risks that could either halt or reverse the current market rally. Fears of greater inflation, for instance, could cause investors to pull out of stock markets in search of alternative investments, such as real estate and precious metals.
With all this in mind, it is difficult to definitively answer the question of whether or not the S&P 500 will push above 4600 by the end of 2020. The impact of these myriad factors is impossible to precisely predict; however, given the current conditions, it certainly seems possible. The ultimate answer to this question will likely depend heavily on how well the US economy can handle the uncertainty of 2021.
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