It looks like there is little that can trouble investors at the moment.
The S&P 500 is on course for its best week of the year so far, with a gain of about 2.5 percent with one more trading day to go. That added to gains that have lifted the benchmark index more than 10 percent this year, setting a series of record highs.
Other major indexes, like the Dow Jones industrial average and the tech-heavy Nasdaq Composite, have recently traded at or near record highs, as have individual companies as varied as Microsoft, JPMorgan Chase and Walmart. Shares of the social media company Reddit jumped nearly 50 percent on their first day of trading on Thursday, a sign that investors are eager for more tech companies to go public this year.
The run has been fueled by a ferocious influx of cash: Investors poured nearly $60 billion into funds that buy stocks in the United States for the week through March 13, a record for data from EPFR Global, which has been tracking fund flows for more than 20 years. A subsequent outflow from funds for the week through Wednesday — weekly flow numbers can be jumpy — did little to disrupt the momentum.
This week, the rally continued despite the Federal Reserve on Wednesday forecasting that inflation would remain marginally hotter this year than it had predicted a few months ago. As a result, central bank officials expect interest rates to come down more slowly in 2025 than previously predicted, and only narrowly maintained their forecast for three quarter-point cuts this year.
Just as a rapid rise in interest rates knocked the stock market lower in 2022, the expectation for lower rates this year has formed part of the case for stocks to rise.
But the prospects for cuts have slowly been dimming, jolted by stubborn inflation in the first two months of the year. Investors in the futures market had expected the Fed to cut rates up to six times this year, but have recently come around to the central bank’s view that only three cuts are more likely.It hasn’t seemed to matter for the stock market’s barnstorming rally.
