The Strategist

US S&P 500 hits 22-year high, experts waiting for collapse

10/01/2019 - 09:35

The S&P 500 Index, which includes US companies with the highest capitalization, is showing the best growth rate since 1997. However, many investors fear that this will be followed by a collapse, just like in the last year.

The S&P 500 index, that includes the US companies with the biggest market cap, has grown by 19% in the three quarters of 2019, showing the best growth rates since 1997, The Wall Street Journal writes. The newspaper notes that prices are also rising for both bonds and commodities. In the third quarter, the index grew slightly - only by 1.2%. Moreover, now it is only 1.6% less than its own historical maximum, set on July 26.

The third quarter ended on a relatively calm note, writes WSJ. On Monday, the S&P 500 grew by 0.5%, to 2976.74. The growth driver was Apple, whose papers have been trading at a maximum since the beginning of the year. At the same time, many investors are afraid of repetition of the last year’s situation, when the S&P 500 peaked at the end of September, and then collapsed by 20% over the next three months, WSJ notes.

The publication notes that the growth of quotations of traditionally reliable securities (for example, US treasury bonds) indicates that investors feel insecurity about the global economy. Reasons for tension are the US-China trade war and the monetary policy of the US Federal Reserve.

“Over 25 years of work, I have never seen so much revolving around what is happening every day in the political sphere,” said Eric Shutt, responsible for the investment strategy of Northwestern Mutual Wealth Management. He emphasized that "uncertainty exists all the time."