The S&P 500 index surged past 7,000 for the first time in history on Wednesday, as investors aggressively bought equities on signs that the war between Iran and its neighbors may be approaching a resolution. The benchmark index closed up 2.1% at 7,012.53.
"This is a classic relief rally, unwinding the geopolitical hedge that has suppressed risk assets for months," said David Miller, head of U.S. equity strategy at Goldman Sachs, in a note to clients. "If the diplomatic track holds, the market is repricing for a peace dividend and a return to focusing on fundamentals."
The advance was broad-based, with advancing stocks outnumbering decliners by nearly 5-to-1 on the NYSE. Trading volume was 25% above its 20-day average. Technology stocks were the top performers, with the sector gaining 3.5%, followed by a 3.1% jump in Consumer Discretionary. The CBOE Volatility Index, or VIX, plunged 18% to 14.5, its lowest level since the conflict began.
The rally signals a major psychological boost for a market that had been weighed down by persistent geopolitical fears. The key question now is whether the newfound optimism can hold. The move was accompanied by a selloff in safe-haven assets, with the U.S. 10-year Treasury yield climbing 12 basis points to 4.52% and gold falling 1.5% to $2,350 an ounce.
This article is for informational purposes only and does not constitute investment advice.
