Recent market strength bodes well for investors

Local experts discuss state of stock market, how it affects investors.

The stock market, after years of reaching new peaks, underwent two years of moderate struggles, trading below previously high levels.

But recent surges in the market have changed all that, with the Dow Jones Industrial Average attaining fresh closing highs twice this week.

Meanwhile, the S&P 500 is on track for its ninth straight week of gains and, as of Thursday morning, is up more than 24%. It finished at 4,783.35, putting it close to its highest closing level of 4,796.56 set in January 2022.

Every other major index is also on track for a strong finish to year of solid gains. The Nasdaq has outpaced the broader market and is up more than 44% for the year.

We spoke with two local experts, Scott Simons, a financial adviser with Ridgeline Wealth Planning and Mike Fink of Raymond James, about the state of the market and what people should be doing to stay solvent in it. Here’s what they had to say.

“The Fed’s definitely finally moving less hawkish and there’s a strong likelihood that next year, the next move for rates is actually down based on the Fed’s own projections. So this allowed the markets to exhale as it has been holding its breath for a while and the tech sector has been a large beneficiary of that this year, the NASDAQ surging (more than 44%) and it’s certainly been a profitable place to be. Certainly the Magnificent Seven, which are seven of the largest tech stocks, have been a huge benefactor.

“The nice thing is, for ordinary investors, if they’ve got exposure to the S&P 500, your percentage that actually falls into that Magnificent Seven is pretty significant. You’ve actually got 28% exposure there to your Microsoft, Apple, Amazon, Nvidia, Google, Meta and Tesla, so those stocks have really rallied with the outlook towards lower rates.”

“The most recent surge, which brought the S&P up around 16% off of the October lows, has mostly to do with the Feds dovish policy tone. The market sentiment has shifted from higher for longer to steep cuts due to the economic uncertainty. Earlier this year, what drove stock prices higher was the hype surrounding artificial intelligence.

AP A sign at the intersection of Broad and Wall streets is shown outside the New York Stock Exchange Dec. 11. A powerful rally across Wall Street sent the Dow Jones Industrial Average to a record after the Federal Reserve indicated that the cuts to interest rates investors crave so much may be coming next year.