As the S&P 500 hits its 25th record high of the year… This historic achievement is powered by a tsunami of investment and hopes that future monetary policy will be different. Since the beginning of 2023, around $800 billion have flooded into different buckets. Of that total, $475 billion has been specifically targeted to equity funds. Just like November 2021, investors are getting their hope back. The primary driver of this massive capital influx is that they are expecting a huge 150 basis point cut in the federal funds rate within the next year.
Today’s market environment looks quite different than in decades past. The five largest issuers currently control more than 28% of the market. This represents a profound jump from just 12% just 10 years ago and only 12% six decades ago. The largest issuers are doubling down on hoarding their market power. This trend has led to historic streaks of alarm as American stocks are perceived to be more risky than a few years ago.
A strong dollar and rising geopolitical risk have tempered foreign investor interests in the U.S. market. This boom comes after the clearing of trade uncertainties that previously clouded investment decisions. This newfound interest from abroad augments domestic enthusiasm, further stoking market expansion and increasing liquidity.
The S&P 500’s recent performance is closely tied to expectations that the Federal Reserve will resume its monetary policy easing cycle. Analysts say this expected pivot would boost economic growth and offer additional support for equities. Investors have an acute eye on how these possible changes will affect near-term and long-term overall market structure.
For all the bullish factors, it’s worth remembering just how risky trading is today. In fact, according to recently released data, an astonishing 77.37% of retail investor accounts lose money. This is the case when trading CFD (Contracts for Difference) and Spread Betting with certain providers. This statistic is both a hopeful and sobering reminder to investors that finding opportunity amid the new complexities of trading can be a double edged sword.