This article is a reprint from “Toushiru” provided by Rakuten Securities, “Understanding in TOP 3 Minutes! Today’s Investment Strategy”. S & P 500 Index Breaking Today’s Point 4000: When Will It Reach 5000? With a view to post-corona, the economic outlook and business sentiment are improving. The whereabouts of the “performance market” that the US market has begun to incorporate. We would like to introduce the views of Mr. Mutsumi Kagawa, Chief Global Strategist of Rakuten Securities Economic Research Institute. S & P 500 Index Exceeds 4000: When Will It Reach 5000? In the US market this week, the S & P 500 index hit record highs on the 5th and 7th. The good news is that long-term interest rates are settling down amid strong expectations for an economic recovery. Capital goods and tech stocks led the rise in the US Employment Plan announced by the Biden administration last week. In this article, I would like to focus on the fact that the S & P 500 Index, which symbolizes US stock trends, has surpassed 4000 points, which has been regarded as a “turning point.” Chart 1 shows the transition of the S & P 500 Index since 1991 in a logarithmic chart. It can be seen that the index has increased 12.4 times in about 30 years. Converted to an annual average return, it is “+ 9.3%”. Dividends (income gains) are added to actual equity investments, so the total return (total return) of the S & P 500 Index was double-digit on average annually. In terms of long-term performance that takes into account risk (blur of returns), it is worthy to be called the “world’s strongest stock index.” Japanese stocks (TOPIX) rose only 12.4% in the same 30 years. When will the S & P 500 Index reach its next milestone (5000 points)? It is not possible to accurately predict the future of the market, but if it continues to grow at an annual rate of 9.3% starting from the current level, it can be estimated that it will reach 5,000 within the next three years. FRB is an image that (Federal Reserve Board) reaches to 5000 to 2023 the end of the year that you are prospect to continue the zero interest rate policy in the main scenario.
(Source) Created by Rakuten Securities Economic Research Institute from Bloomberg (April 7, 2021)