Five Charts Showing The S&P 500’s Wild Ride Back To Record Highs

(Bloomberg) -- The S&P 500 Index set new closing and intraday highs for the first time in two years Friday, capping a stunning rebound from 2022’s violent selloff. 

The resurgence is being powered by the so-called Magnificent Seven technology companies — Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla Inc. — and it’s largely based on investors’ hopes for artificial intelligence and cost-cutting efforts that fueled a profit boom at those firms. 

It’s also getting significant help from a Federal Reserve that appears to be done raising interest rates and starting to consider when to begin cutting after the biggest monetary tightening campaign in decades.

Here’s a look at the S&P 500’s wild round trip: 

The road from a previous record in January 2022 took 512 trading sessions. That’s the longest dry spell in more than a decade, according to data compiled by Bloomberg.

Historically, however, the 512-day streak isn’t quite as impressive. In the 1970s, the S&P 500 went more than seven years without a record as inflation skyrocketed and growth stagnated.

After peaking two years ago, the S&P 500 shed as much as a quarter of its value before hitting a closing low of 3,577.03 on Oct. 12, 2022. Since then, it has added more than $10 trillion in market value while rebounding from the 2022 selloff, the worst year for the index since the financial crisis in 2008. 

The last rout came as fast-growing tech companies got pummeled by rising interest rates. In addition, Russia’s war with Ukraine created a humanitarian crisis in Europe, oil prices soared past $100 a barrel and parts of the Treasury yield curve inverted.

The information technology, communication services and consumer-discretionary sectors led the S&P 500’s bounce back in 2023. They also house the Magnificent Seven technology companies. 

In the first half of 2023, the seven-largest companies in the S&P 500 outperformed the rest of the index by the most since the dot-com bubble. Apple crossed back above a $3 trillion market capitalization in December after rallying nearly 50% last year. 

Nvidia, whose stock skyrocketed in 2023 following a massive sales forecast in May that ignited AI excitement, takes the title as top percentage-gain contributor to the S&P 500 since October 2022, rallying over 400%, followed by Royal Caribbean Cruises Ltd., Advanced Micro Devices Inc., Meta and Broadcom Inc.

In terms of index-point contributions, Microsoft holds the top spot, adding 156.90 points. Nvidia added 141.54 points, while Apple contributed 95.40 points, with Meta and Amazon rounding out the top five.

First Republic Bank and SVB Financial Group were the two worst performers in the S&P 500 last year, as multiple regional lenders collapsed. First Republic plunged nearly 100% and ultimately was taken over by JPMorgan Chase & Co., while SVB lost almost 70% following the failure of its Silicon Valley Bank subsidiary. 

Other major decliners in that span were Lumen Technologies Inc., Advance Auto Parts Inc. and Enphase Energy Inc., each of which shed about 60%. Most of these worst performers are no longer in the S&P 500.

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