S&P 500 Hits Record, Has Recovered Two-Year Losses

Dow, Nasdaq also rise
By Newser Editors and Wire Services
Posted Jan 19, 2024 3:46 PM CST
S&P 500 Now Has Recovered Losses Since Start of 2022
The exterior of the New York Stock Exchange is shown on Friday in New York.   (AP Photo/Peter K. Afriyie)

Wall Street returned to record heights Friday to cap a punishing, two-year round trip dogged by high inflation and worries about a recession that seemed inevitable but hasn't arrived:

  • The Dow rose 395.19 points to 37,863.80.
  • The S&P 500 rose 58.87 points to 4,839.81, erasing the last of its losses since setting its prior record of 4,796.56 at the beginning of 2022, per the AP.
  • The Nasdaq rose 255.32 points to 15,310.97.

Even more than high inflation itself, Wall Street's fear was focused on the medicine the Federal Reserve usually uses to treat it. That's high interest rates, which press the brakes on the economy by making borrowing more expensive and hurting prices for stocks and other investments. And the Fed rapidly hiked its main interest rate from virtually zero to its highest level since 2001, in a range between 5.25% and 5.50%. Through many cycles in history, the Federal Reserve has helped induce recessions through such increases to interest rates. Coming into last year, the widespread expectation on Wall Street was that it would happen again. But this time was different, or at least it has been so far. The economy is still growing, the unemployment rate remains remarkably low, and optimism is on the upswing among households.

"I don't think this cycle is normal at all," said Niladri Mukherjee of TIAA's Wealth Management team. "It's unique, and the pandemic introduced that element of uniqueness." Some critics say Wall Street has gotten ahead of itself, again, in predicting how soon the Federal Reserve may begin cutting interest rates. "The market is addicted to rate cuts," said Rich Weiss, of American Century Investments. Repeatedly since the Fed began this rate-hiking campaign early in 2022, traders have been quick to forecast an approaching easing of rates, only to be disappointed as high inflation proved to be more stubborn than expected. If that happens again, the big moves higher for stocks and lower for bond yields may need to revert.

(More stock market stories.)

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