S&P 500 tops 4900

The last week of January began with gains in both stocks and treasuries, with the S&P 500, a key benchmark for US stocks, surpassing the significant threshold of 4900. In 2024, the S&P 500 and Nasdaq have seen increases of 3.3% and 4%, respectively, while Canada’s S&P/TSX has recorded a 1.2% gain. European stocks have also performed well, and Japan's NIKKEI has advanced by 7.66%.

Fourth-quarter earnings reports are underway, with many major companies meeting market expectations. Notably, Tesla missed earnings projections, but its shares still saw gains. This week, market attention is focused on giants such as Apple, Microsoft, Alphabet, Meta, and Amazon, collectively constituting $10 trillion of the US market cap. Maintaining current market levels hinges on these companies not delivering disappointing earnings.

There is speculation in the markets that central banks in the US and Canada may soon start lowering interest rates, contributing to the ongoing rally. This week is pivotal as more earnings reports are anticipated, along with a rate decision and an employment report that will offer insights into the Fed's decision-making process.

Geopolitical tensions have had minimal impact thus far, with oil experiencing a slight increase following the unfortunate incident where US personnel were killed in the Middle East.

Since October, US markets have surged by almost 20%, raising questions about the sustainability of such robust returns in 2024 unless the "magnificent seven" companies report unprecedented earnings or smaller companies catch up in the rally.