What does the record of the S&P 500 index mean

What does the record of the S&P 500 index mean

What does the record of the S&

The 500 Most Important Companies Index on Wall Street set a historic record after Joe Biden's infrastructure plan proposal

(Photo by JOHANNES EISELE / AFP via Getty Images) New record for Standard & Poor's 500, recognized as the most important benchmark index on Wall Street, which reacts positively to the more than two trillion dollar plan proposed by President Joe Biden for the United States. The S&P 500 basket, which brings together the five hundred companies with the largest free float on the market, equal to 80% of the total available among those listed on the New York Stock Exchange and Nasdaq, broke through 4 thousand points (4,019, an all-time high) in the first day of the second quarter of the year, testifying investor confidence in the recovery. Tech with 27% is the most represented sector in the S&P 500, which closed the first quarter up by 5.8% (Nasdaq + 2.8%).

Although financed with an increase in corporate tax on companies (which will rise from 21 to 28%), the infrastructure plan is seen as a stimulus to employment and together with the distribution of the vaccine has spread optimism in the recovery of the economy. This policy reverses the signal given with the $ 1.9 trillion subsidy plan for people in need. The inflation risk sensed by the markets had raised fears of a rise in interest rates on government bonds and therefore a lower return on investments in tech stocks, with the Nasdaq correcting earlier this month.

The tug-of-war between the two trends, however, is still ongoing: although down on Thursday, 10-year US Treasuries are still at 1.69%, while a year ago they were 0.62%. On the other hand, the S&P 500, after collapsing by a thousand points in less than a month between February and March 2020, underwent a rally that took it from around 2,300 points to its current peaks. The recent climb was built above all by the performance of energy and financial stocks, which are worth about 14.1% of the index, explains Bloomberg, with an increase of 29% and 15% respectively, in 2021 offering the entire index a greater growth than Nasdaq itself.

The plan that Biden will propose to Congress includes hundreds of billions for building renovations, energy redevelopments, refueling systems for electric mobility, protection of water assets and investments in broadband. According to Mary Daly, president of the San Francisco Federal Reserve, it will "push growth, not inflation" feared by several investors, while the central bank recently confirmed its willingness to keep interest rates low until the economy has full employment is restored and the inflation rate will not reach 2% in a stable way.

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