Key 2,800-Level Threshold In S&P 500 Leads to Strong Market Gains

The first couple of days of March saw a nice surprise from the stock market, helping to boost stocks to the best start to a year in almost thirty years. 

The Standard & Poors 500 closed the first day of March, Friday, up 0.7 percent at 2,803.69. This is the first time the index closed above 2,800 since November 8, last year.  In addition, the Dow Jones Industrial Average closed up 110.32 points, at 26,026.32, mostly on the heels of Nike and Chevron outperforming. Finally, the Nasdaq Composite saw a slight jump of 0.8 percent, up to 7,595.35, largely by gains from Amazon.

The climb, on Friday, came only a day after all the major indexes posted steady monthly gains in February. This actually pushed the S&P 500 to its best year start since 1991, more than 11 percent on the year. The Dow closed the match with equal gains while the Nasdaq marked up 14 percent. 

Analysts now suggest that this news could be just the beginning.  Indeed, it could lead to more gains for investors over the rest of the year. Actually, data from as back as 1950 show that in 25 out of 27 seasons where the S&P 500 had gains in January and February, the trend continued through the rest of the year. 

Essentially, this means, that when stocks improve in January and February, data shows that the gains will continue over the next ten months. 

A big part of the jump, it seems, is the result of trade talks settling between the United States and China.  Bloomberg News reported, on Thursday, that officials in the US are readying to finalize a trade deal between President Donald Trump and Chinese President Xi Jinping, which is slated for mid-March.  

White House economic advisor Larry Kudlow reported that these two countries are making “fantastic” progress in their negotiation progress.  Similarly, Treasury Secretary Steven Mnuchin said that both sides have “made a lot of progress.” 

While we don’t have any specifics as to what this progress might be, stocks came off these announcements with serious jumps from previously disappointing data.  For example, the Institute for Supply Management released data, this week, showing that US manufacturing activity expanded at the slowest pace since November of 2016.