6,000 Is the New S&P 5000

All hail! The S&P 500 closed Monday at 6,001.35!^[i] All ye who have been waiting for it to hit the mystical 6,001 mark, rejoice!

What, not round enough for you? Ok fine, by closing at 6,001.35, the S&P 500 notched another milestone: Its first close above 6,000. This, after registering its 50^th record high this year last Friday (in price-only terms). Cool achievements! While milestones are fun trivia, if arbitrary, they don’t tell you where stocks are headed next—worth keeping in mind as sentiment continues to warm.

Friday’s record isn’t just this year’s 50^th. It is also this bull market’s 50^th. (Again, that is in price-only terms.) The first all-time high came on January 19, 2024—about three months after this bull market turned one. Since then, the records have come in spurts: After 22 new highs in Q1, the S&P 500 delivered 9 in Q2, 12 in Q3 and 8 (through Monday’s close) in Q4. For visual learners, here is a chart.

Exhibit 1: S&P 500’s 50 All-Time Highs

Source: FactSet, as of 11/11/2024. S&P 500 Price Index, 1/4/2022 – 11/8/2024.

These landmarks reflect where stocks have been, but don’t overrate their meaning. As this year’s records illustrate, there isn’t much meaning to stocks’ closing price. Records often come in clumps, punctuated by volatility. After the S&P 500 delivered six new highs in a row in early July, it registered none from mid-July to mid-September.

The same goes for index levels. Yes, “S&P 500 at 6000” gets eyeballs. (Although likely not as many as the more poetic S&P 5000 got.) But the S&P 500 Total Return Index just made its way over 13,000 (and passed 6,000 back in July 2019).^[ii] We didn’t see headlines cheering these milestones—or that the S&P 500 delivered its first all-time high on a total return basis of this bull market on December 13 last year (and is up to 61 records through last Friday). Yet total return better reflects the investor experience since it includes price change plus reinvested dividends. Focusing on price returns alone means missing out on the cash payment and that cash’s appreciation (or depreciation) when reinvested—which can contribute considerably to an investor’s overall return.

Plus, round numbers rack up faster as an index swells and a thousand-point gap becomes smaller in percentage terms. Case in point, it was February of this year that we celebrated the S&P 500’s hitting 5,000. We noted then that 6,000 was a mere 20% price return away. Well, we got there—and now, from 6,000, getting to 7,000 would be just 16.7%. And 8,000’s percentage gap would be smaller still. However you measure it, all-time highs sing a similar song about a bull market’s climb—meaning, that it happened.

But records don’t tell you what stocks will do next. Sure, the longer a bull market lasts, the more all-time highs stocks likely generate. During the 1990s bull market, the S&P 500 recorded 308 new highs in price terms.^[iii] During the 2009 – 2020 run, US stocks recorded 255.^[iv] But a yearslong equity upturn doesn’t automatically mean scores of highs, either. The 2002 – 2007 bull had just nine, and the S&P 500 took just over four and a half years to reach its first one—and then entered a bear market a little over four months later.^[v] In contrast, during the 2020 – 2022 bull market, the S&P 500 needed just six months to register a new price-index high—and it ended up with 91 records.^[vi] At some point, this bull market will log its last record. But we probably won’t know that at the moment. Turning points are clear only in hindsight.

While stock index records aren’t a forecasting tool, they can shed some insight on how investors are feeling in the moment. In new bull markets, all-time highs often lead to calls of stocks going “too far, too fast.” Investors’ acrophobia (the fear of heights) tends to reflect pessimism or skepticism, spurring concerns that markets are “disconnected” from reality and don’t realize how poor economic conditions are—which supposedly makes a pullback inevitable.

We aren’t hearing this kind of chatter right now. Instead, we see calls that S&P 500 6000 reflects a “psychologically significant milestone” that could invite more investment and bring in money from the sidelines. Our fundamental issues with that thinking aside—“cash on the sidelines” isn’t really a thing, as stocks exist in an auction marketplace where eagerness to pay matters more than cash available—this kind of view indicates folks are feeling optimistic overall. That confidence isn’t necessarily unwarranted. But warming moods also make the environment more fertile for complacency—which is worth guarding against in a maturing bull market.