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S&P 500 Closes at Record High Amid Tech Rally and Positive Housing Data

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Key Points

  • The benchmark index rallied more than 52 percent from its March low, reached the height of the coronavirus pandemic, and is up year-to-date by 5 percent.
  • The rebound marks the fastest-ever recovery from a bear market after the pandemic spurred the swiftest 20% decline on record. Government assistance, Federal Reserve monetary stimulus, and strong contributions from major technology firms have helped the rapid rally on the market.
  • The Nasdaq also closed at another record high, driving the tech-heavy benchmark higher with companies like Amazon, Tesla, Apple, and Alphabet.
  • Visit The Financial Today’s homepage for more stories.

For the first time since February, the S&P 500 closed at a record high, amid positive housing-market data and a broad tech rally.

The benchmark index rallied more than 52 percent from its March low, reached the height of the coronavirus pandemic, and is up year-to-date by 5 percent.

The rebound marks the fastest-ever recovery from a bear market after the pandemic spurred the swiftest 20% decline on record. Government assistance, Federal Reserve monetary stimulus, and strong contributions from major technology firms have helped the rapid rally on the market.

“Even the most optimistic people in March were unlikely to have expected the market to recoup all of its losses in less than 5 months,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance. “The massive amounts of liquidity that the Federal Reserve has injected into the system is as big reason for the stunning recovery that we have just witnessed.”

The Nasdaq also closed at another record high, driving the tech-heavy benchmark higher with companies like Amazon, Tesla, Apple, and Alphabet.

Stocks were bolstered Tuesday when the Department of Commerce announced a 22.6 percent rise in housing starts in July, the latest proof of the sector’s recovery. The rise was more than economists expected and marked the third straight month of increases.

The positive data on housing outweighed the stalled discussions on the next stimulus bill. Negotiations between Democrats and Republicans on the next package seem to have reached a stalemate, suggesting that it is unlikely that another aid round will arrive soon. Nonetheless, investors seem to expect another stimulus bill to eventually pass.

Furthermore, on Monday, the US Commerce Department released new regulations to restrict Huawei’s access to foreign chips, the latest step in the crackdown on the technology giant by the Trump administration. This could make matters more difficult between the US and China.

The earnings season continued with both Walmart and Home Depot announcing results that exceeded the expectations of Wall Street on Tuesday. Target and Nvidia are expected Wednesday to announce their earnings.

Oil slipped as traders awaited US supply data and an OPEC+ meeting on Wednesday. West Texas Intermediate crude fell as much as 1.8%, to $42.11 per barrel. Brent crude, the international benchmark, declined 1.3%, to $44.76 per barrel, at intraday lows.

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