S&P 500 Hits 9-Year High with Strong February Performance

In February, the stock market enjoyed a surprisingly robust performance, defying historical trends and delivering impressive gains across the board. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all reached record highs during the month, with the S&P 500 leading the way with a 5.2% increase. This marked the index’s best February performance since 2015. The Dow Jones Industrial Average also performed well, ending the month with a 2.1% gain, its best February showing since 2021. The tech-heavy Nasdaq Composite outperformed both, posting a 6.1% gain for the month, its best February performance since 2015.

The breadth of the market’s rally was also notable, with more than 71% of S&P 500 stocks recording positive returns. However, the median return of 3.3% fell short of the index’s overall performance, according to FactSet data. The strong performance was largely driven by a select group of mega-cap tech stocks, including Nvidia, Meta, and Amazon. These companies saw substantial gains, with Nvidia rising by 30%, Meta by 26%, and Amazon by 13%, collectively adding almost $1 trillion in market capitalization in February alone.

Despite February traditionally being a lackluster month for stocks, characterized by below-trend returns due to portfolio adjustments and fourth-quarter earnings reports, this year was an exception. From 2000 to 2023, February saw an average return of -2.1% for the S&P 500, significantly underperforming other months. In contrast, the S&P 500’s 5.2% gain in February 2024, combined with January’s 1.6% increase, marked the best two-month start to a year since 2019, according to the Wall Street Journal.

The stock market’s strong performance in February is particularly remarkable considering the prevailing concerns about rising interest rates, which are currently at their highest levels in two decades. Instead of being deterred by these high rates, investors focused on the potential for significant earnings growth, driven by advancements in technologies like artificial intelligence. The S&P 500 has now rebounded by more than 40% from its late 2022 low, an impressive recovery given the high bond yields, which typically lead to lower stock returns as investors favor the safety of government bonds.

The market’s resilience has led to many mainstream strategists revising their forecasts for the end of 2024. Analysts at firms such as Barclays and Goldman Sachs have significantly raised their targets to reflect the market’s strong performance. In addition to stocks, bitcoin also experienced a rally in February, reaching its highest level since late 2021.