NEW YORK, June 26 ― The S&P 500 shook off concerns about a more hawkish Federal Reserve to post a record high this week, but activity in some areas of the market indicates concern over potential volatility ahead of key economic data and corporate profit reports.
At the same time, gains this month have been more concentrated, as investors piled back into the big technology stocks that led markets higher last year and for most of the past decade. Investor concerns include the debate about whether rising inflation will be sustained enough to force the Fed to begin a sooner-than-expected rollback of its easy-money policies. The Fed's main inflation measure posted its biggest annual increase since 1992, data showed yesterday.
Some investors also believe the S&P may be overdue for a significant pullback. Since World War II, the index has had a decline of at least 5 per cent an average of every 178 calendar days, according to Sam Stovall, chief investment strategist at CFRA. The latest market advance has lasted 276 days without such a fall, the longest period since January 2018, when a 715-day advance was followed by a 10.8 per cent drop for the S&P 500.
To be sure, there are plenty of factors that suggest the backdrop for equities remains positive. S&P 500 earnings are expected to rise by about 37 per cent this year and almost 12 per cent next year, according to Refinitiv IBES. In the second quarter, for which reports will flood in starting in mid-July, earnings are expected to jump 65 per cent.