S&P 500 prints fresh record intra-day highs above 4800, on course for massive near-28% annual gain

• The S&P 500 printed a fresh record high at 4808 and looks on course for a fresh record closing high.
• The index is on course for a monthly gain of about 5.0% and an annual gain of nearly 28%.

The S&P 500 hit a fresh intra-day record high on Thursday at 4808, but for the most part has traded within the ranges established over the last three sessions, where the index has mostly traded between the 4775 and 4805 levels. Right now, the index trades almost bang on the 4800 level and with modest gains of about 0.1% on the session. If it can close at current levels, that would mark a new record closing high.

Trading volumes remain incredibly low, as is typical of the final trading week of the year given the high proportion of market participants away for Christmas/New Year’s celebrations, which goes some way to explain the lack of volatility/trading opportunities. In that regard, things will get a lot more interesting next week with a much busier economic calendar and amid the return of most market participants from holidays.

The S&P 500 is up about 1.5% on the week and an impressive near-6.0% higher versus last week’s sub-4530 lows, supported by a fading of concerns about the impact of Omicron on the global economy and earnings, as well as strong US data that has solidified confidence in the US economic health. Indeed, the latest weekly report that was stronger than expected, with initial claims dropping back under 200K, continued claims falling to a fresh post-pandemic low at 1.716M, putting it broadly back in line with pre-pandemic levels, while the insured unemployment rate dropped to 1.3% from 1.4%. If the S&P 500 can close out the session around 4800, that puts it on course for monthly gains of about 5.0% and annual gains of close to 28%.  

Seasonality is another factor being cited by equity analysts as behind recent strength/ongoing support. Analysts noted earlier in the week that the final five days of each calendar year and then the first two of the next are typically associated with gains of about 1.3% in the S&P 500. In terms of the other major indices, the Nasdaq 100 index is on course to gain about 0.3% on the session and after moving back above 16.5K, though remains within the trading 16.4-16.6K trading range established over the last three sessions.

The Dow, meanwhile, managed to pip Wednesday’s peaks and print a fresh intra-day record high above 36.6K for the first time. The index has since slipped back to trade flat on the day around 36.5K. The CBOE S&P 500 volatility index, meanwhile, continues to trade with a negative bias and is back below 17.00 and approaching the mid-November lows just above 16.0.