Topline
It’s an unseasonably warm February for stocks, as each of the three major indexes registered all-time highs this month and two of the three indexes registered their best February in nearly a decade.
It's been an unseasonably warm winter for stocks.
Key Facts
After each index rose modestly Thursday, the S&P 500 closed the month up 5.2%, the Dow Jones Industrial Average ended up 2.1% and the tech-heavy Nasdaq is up 6.1%.
The S&P and Nasdaq each notched their best February returns since 2015, while the Dow had its best February since 2021.
Breadth this month has been strong, as more than 71% of the stocks included in the S&P have posted positive returns, though the median return of 3.3% is well below the benchmark index’s total return, according to FactSet data.
Coupled with January’s 1.6% gain, the S&P had for its best two-month start to a year since 2019, according to the Wall Street Journal.
That comes as, yet again, a handful of mega-cap tech stocks accounted for much of the strong performance; Nvidia (up 30% this month), Meta (up 26%) and Amazon (up 13%) added almost $1 trillion in market capitalization in February alone.
Tangent
It’s a notable accomplishment for stocks to register such a bumper February, considering it’s a month typically associated with below-trend returns due to the hangover of portfolio readjustments and a stream of fourth-quarter earnings reports. From 2000 to 2023, February brought an average return of -2.1% for the S&P, by far underperforming the average 0.7% positive return for all non-February months since the turn of the century.
Surprising Fact
The S&P, which sat at just below 5,100 Wednesday, is already above most mainstream strategists’ forecasts for the end of 2024 set late last year. Some firms, like Barclays and Goldman Sachs, have already bumped their targets up considerably to account for the latest rally.
Key Background
The stock market rally comes as investors largely shrugged off concerns about the highest interest rates in two decades and instead focused on the prospects of significant earnings growth in the light of technological innovation like artificial intelligence. The S&P is now up more than 40% from its late 2022 bottom, an almost unbelievable feat considering bond yields sit at roughly the same historically high levels they sat during the 2022 selloff (stocks tend to underperform when bond yields are high as investors can lock in a high, near-guaranteed return by buying U.S. government bonds). Also rallying this month was bitcoin, which recently hit its highest level since late 2021.
Further Reading
