The S&P 500 tops a record high that ‘clears the charts’ of resistance ahead of a week of earnings, inflation data

Published Fri, Jan 19 20243:31 PM ESTUpdated Fri, Jan 19 20244:13 PM EST

The S & P 500 surged to a new all-time high on Friday, confirming the stock market is in a bull market and suggesting the rally has further to go in 2024, ahead of a big week of earnings and inflation data. The S & P 500 rallied more than 1% on Friday, above both its closing and intraday records that it last reached in January 2022. The closing high established then was 4,796.56, while its intraday high was 4,818.62. The broader index ended the day at 4,839.81. For investors, it's an encouraging sign for equities even amid lingering concerns of slowing economic growth. Some worry the major averages are overvalued after last month's dovish pivot from the Fed has stocks pricing in more rate cuts than central bank policymakers have indicated. "There's nothing bearish about new highs," said Katie Stockton, founder and managing partner at Fairlead Strategies. "Meaning that when a major index like the S & P 500, like the Nasdaq 100, reaches a new all time high, what it does is, it clears the charts of resistance." The bullish development would be a boon for more risk-on sectors, Stockton said, including information technology, communication services, consumer discretionary, as well as financials and industrials, all of which the technical analyst expects will outperform in a constructive market outlook. "In terms of duration, we've actually been of the belief that this year will be just generally a bullish year," Stockton continued. Historical precedent Other technical analysts are optimistic about the equity market. According to historical precedent, Oppenheimer's Ari Wald noted, in 13 out of the 14 other times since 1950 that the S & P 500 took at least a year to reach a previously set an all-time high, the broader index was higher 12 months afterward. In fact, Wald noted it was higher by a median gain of 13%. To be sure, he said, the returns one month out were in line with the average return, typical of a consolidation after a breakout. But, he said the returns three to 12 months out were "especially positive." "We do think it's an intermediate term positive," Wald said. "That should lead to higher highs over the coming months, and a basis for our view why we recommend investors staying positioned in the market and using pullbacks opportunistically." For 2024, Wald anticipates the S & P 500 will end the year at the 5,400 level, representing a roughly 12% rise from Friday's close of 4,839.81. He especially favors mid-cap growth stocks. Inflation data, earnings ahead Next week will also bring the Fed's preferred inflation gauge for December, which is expected to confirm the recent trend of easing inflation. Core personal consumption expenditures price index, which excludes volatile food and energy prices, is expected to have ticked up 0.2% for the month, according to economists polled by Dow Jones. That's up from 0.1% the prior month. But year over year, that represents a rise of 3.0%, down from an increase of 3.2% from the year-ago period in the prior month. An inflation reading in line or lower than expectations would likely be received positively by investors, who expect that further signals of cooling prices will put the Fed on track for rate cuts sooner, rather than later. As it is, the CME FedWatch Tool shows markets are currently pricing in a 46% of a quarter percentage point rate cut in March, though that's markedly down from a roughly 77% likelihood just one week ago. "We still think that the rate of inflation [is] coming down and with the economy slowing, that still gives the Fed the ability to start cutting rates," said Dave Sekera, chief U.S. market strategist for Morningstar Research Services. "In my own view, I just think that, considering the Fed was originally behind when they started raising rates when inflation was rising, I do think the Fed needs to be especially careful it doesn't fall behind if it does want to engineer a soft economic landing," Sekera said. Next week, the fourth-quarter earnings season will ramp up with companies issuing guidance on how their businesses will do in 2024. For stock pickers, that could give them insight into which names could outperform others within sectors. Week ahead calendar All times ET. Monday Jan. 22 10 a.m. Leading Indicators Tuesday Jan. 23 10 a.m. Richmond Fed Index (January) Earnings: General Electric , Synchrony Financial , D.R. Horton , Raytheon Technologies , Verizon Communications , Halliburton , Johnson & Johnson , Procter & Gamble , Lockheed Martin Wednesday Jan. 24 9:45 a.m. PMI Composite SA preliminary (January) 9:45 a.m. S & P PMI Manufacturing SA preliminary (January) 9:45 a.m. S & P PMI Services SA preliminary (January) Earnings: AT & T , Kimberly-Clark , Abbott Laboratories , Freeport-McMoRan , Progressive Thursday Jan. 25 8 a.m. Building Permits SAAR final (December) 8:30 a.m. Chicago Fed National Activity Index (December) 8:30 a.m. Continuing Jobless Claims (1/13) 8:30 a.m. Durable Orders (December) 8:30 a.m. GDP (Q4) 8:30 a.m. Initial Claims (1/20) 8:30 a.m. Wholesale Inventories preliminary (December) 10 a.m. New Home Sales (December) 11 a.m. Kansas City Fed Manufacturing Index (January) Earnings: Blackstone , Northrop Grumman , Southwest Airlines , American Airlines , Comcast Friday Jan. 26 8:30 a.m. PCE (December) 8:30 a.m. Personal Income (December) 10 a.m. Pending Home Sales (December) Earnings: Norfolk Southern , American Express Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC.