Among the major stock indices, the S&P 500 has performed at a level few could have predicted for 2013. After surpassing its all-time high and holding onto most of its gains, few of the bearish analysts are maintaining their position that the S&P’s run will end. In fact, with 1,600 directly in its sights, the S&P 500 appears primed to continue rewarding investors, to the (pleased) chagrin of analysts who never thought it could happen.
The Sources of Strength
Since the S&P has already leapfrogged most analysts’ mid-year projections, passing the year-end figures is the only thing left for the index to do (it has actually done so among 18 of 43 analysts polled by Thomson Reuters). The prospect is so close that analysts are going back to the drawing board and putting out new benchmarks for the index to surpass. The April 5 job report did little to affect the S&P’s overall momentum, as investors continued buying healthcare stocks like Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) to keep the rally alive.
Earnings reports, expected to unremarkable at best, have yet to put a dent in the S&P index, as U.S. stock futures continued climbing. Investors seeing negligible shifts in unemployment claims and feeling the commitment of the Fed to ongoing stimulus are fueling the rally. Yet some analysts remain pessimistic about the index’s long-term potential…
The Potential for a Correction
Analysts agree that the one thing that could halt the S&P’s surge is the earnings figures, many of which are due out in the coming week. Corrections came in mid-2012 following these reports, justifying fears there may be a repeat. Yet continued revenue increases for major companies — no matter how small — could keep the positive trend alive.
The crisis in Cyprus, continued reports of less-than-stellar growth and other troubling news have not caused the S&P 500 climb to relent. Investors’ belief that the best is still yet to come for the U.S. economy is powering the major indices’ ascent to higher ground. Even with uncertain conditions in Europe, there are more rewards for investors to reap in the coming months.