The S&P 500 index is one of the best-known and most widely traded stock market indices. People around you have probably already heard of it, whether they are investors or just curious individuals interested in finance. The S&P 500 has grown in popularity in recent years and continues to attract new investors from all over the world.
It is one of the main indexes and indicators of overall market performance. Over the years, it has become one of the favorite financial products of all investors. It has also become a reflection of the financial situation in the United States.
What is the history of the S&P 500?
The S&P 500 index was launched in 1957. The index included the 500 most heavily traded stocks on the exchange.
Its creation was preceded by that of several other indexes, dating back to the 1920s, which included relatively fewer stocks.
The index continued to rise steadily until 1982, the year that marked the start of the Tech Boom, or in other words, the Dot-Com era. This period was marked by the very rapid development of Tech companies and the increase in the value of their shares in the market.
Up until the year 2000, the share values of S&P 500 companies rose remarkably, attracting more and more investors, especially those who were enthusiastic about traditional investments (commodity markets, money markets, etc).
Among the key events that the S&P 500 has experienced since its launch was the 2008 financial crisis. This was the biggest crisis in a generation, with the index falling by around 57% from its peak in 2007.
The interest rate: an ally or an enemy of the S&P 500?
The interest rate set by the FED has a major impact on the valuation of equities, especially indices such as the S&P 500. As soon as the Federal Reserve (FED) lowers interest rates, borrowing becomes more affordable, which encourages investors to buy more shares on the stock market. This also explains the opposite case, where rising interest rates drastically discourage investors from borrowing, leading to a fall in overall demand for the S&P 500 index and other equities on the stock market.
Fluctuations in the interest rates set by the Federal Reserve are due to a number of factors, such as inflation control, in response to which the Reserve is often quick to raise rates in order to limit borrowing and reduce demand.
The S&P 500: what do experts think the future holds?
The S&P 500 is one of the world’s most closely followed indexes. It reflects the financial health of the US economy and gives an idea of the global financial situation. According to experts in the field, this index will continue to rise, thanks to the arrival of new technologies and the increasing growth of artificial intelligence, which is enabling the tech sector to develop very rapidly. Major players such as Tesla, Amazon, Microsoft, Apple, and Nvidia are the favorite of the market, and it is expected that these companies will continue to perform well if the economic and geopolitical contexts are favorable.
