SPX: S&P 500 Clocks Record Close as US Stocks Stage Fabolous Comeback. What’s Behind Rally?

Equity prices are on a tear — that’s for sure. But is that a good benchmark of economic health? After all, GDP contracted in the first quarter.

📈 S&P 500 Hits Record Close

• The S&P 500 index (SPX) notched an all-time closing high Friday, reversing course from its steep April drop and bouncing back more than 24% from that point to get where it is now.
• The broad-based market index closed Friday’s cash session up 0.5% to 6,173.07 points, blowing past its February 19 record high. What led to this stunning reversal? It’s a cocktail of events, sprinkled with investor optimism (more than anything?).
• The all-time closing high arrived after a rollercoaster ride on Friday when the Fed’s preferred inflation gauge came in higher than expected at 2.7%, above the 2.6% consensus calls.
• The index initially dived on this news, then jumped back up. Then dived again when Trump said he’s ending tariff talks with Canada — only to rise back up again and score the record.

💼 Record Highs… in This Economy?

• Broadly, war tremors have toned down lately with the Iran-Israel ceasefire holding up. The tariffs, another sticking point, haven’t been talked about too much, and the Fed’s guidance is pointing to a cut sooner than later (investors are eyeing the September meeting).
• But how’s the economy looking? If stocks are sprinting, is that a measure of economic success? Not really. Rising equity prices may be a milestone of note, but there isn’t any economic growth to justify those lofty company valuations.
• As a matter of fact, the US GDP shrank in the past quarter, down 0.5% year on year. There’s still inflation that’s running above the Fed’s 2% goal. Revenue for those same ceiling-valuation companies isn’t setting records.
• Fair to say, then, that the party is fairly isolated just for the stock bros sipping espresso martinis in the corner and bragging about their wins, mostly concentrated in the tech sector.

💥 Markets, but Without Mag 7

• Zoom in on a few players in the S&P 500 and you’ll see that there are just 7 companies that are largely carrying the index into record-high grounds. The familiar Magnificent Seven club where Nvidia NVDA is seen shattering records and hitting formidable valuations, close to $4 trillion.
• What about the S&P 493 then? That’s mostly struggling out of the spotlight. Last year, for example, the Mag 7 rose 57%, while the other 493 stocks in the index only advanced 13%.
• But still, a record is a record and credit’s due where credit’s due — traders and investors, always optimistic by nature, overcame great hurdles to get where they are now. Question is, how far can they go from here?