US inflation is still running hot. So why did the S&P 500 just hit new record highs?

Exuberant investors sent the S&P 500 index soaring to new all-time highs despite hot running inflation.

Woman looking at her smartphone and analysing share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P 500 (INDEXSP: .INX) closed up 1.1% yesterday (overnight Aussie time).

That saw the benchmark US index end the day at a new record closing high of 5,175.2 points. And it puts the index up a whopping 34.2% in 12 months.

It was only back in late January that the S&P 500 broke into all-time highs for the first time in almost two years.

But as we've witnessed with the series of recent record-breaking days on the S&P/ASX 200 Index (ASX: XJO), stock market records are falling hard and fast in these early months of 2024. Though unlikely to break last Friday's all-time highs, the ASX 200 is up 0.2% in late morning trade today.

Although not quite breaking its own recent record highs, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) closed up 1.5%.

The Nasdaq's strong performance was helped by a 7.1% gain in the Nvidia Corporation (NASDAQ: NVDA) share price. With shares up 300.2% in a year, the artificial intelligence company now has an eye-popping market cap of $US2.3 trillion (AU$3.5 trillion).

And all this on the day that US core inflation data came in hotter than expected.

S&P 500 dodges inflation scare

Investors sent the S&P 500 into new record territory despite February's core consumer price index (CPI) coming in slightly above consensus expectations.

Core CPI, which excludes food and energy costs, was up 0.4% from January and up 3.8% over the past year.

That remains well above the US Federal Reserve's 2% inflation target range. But investors are still betting on a series of interest rate cuts in 2024 from the world's most influential central bank.

Commenting on the record-breaking run on the S&P 500, Josh Gilbert, market analyst at eToro said there could well be more gains ahead.

"We see markets as fundamentally supported and driven by the improving earnings cycle and coming interest rate cuts, with the Fed set to cut as early as June this year," he said.

Gilbert added:

Inevitable pullbacks should be seen as an opportunity as these twin pillars remain in place. The fear of investing at highs is misplaced, especially if fundamentals remain supportive, as we see now.

Regan Capital's Skyler Weinand also sounded a bullish note on the outlook for the S&P 500 (quoted by Bloomberg).

"It's proving difficult to see what may stop the market's momentum, as earnings, inflation, and interest rates are moving in the right direction," Weinand said.

Indeed, a bit of 'sticky' inflation data doesn't seem to have stopped the positive momentum for the S&P 500 in the least.

Should you invest $1,000 in Allkem right now?

Before you buy Allkem shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Allkem wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough trading day for ASX stocks this Monday.

Read more »

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in May

These stocks could be best buys this month according to the broker.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

ASX 200 energy shares plunge on shock OPEC move

ASX 200 energy shares like Woodside and Santos are tumbling on Monday. Let’s find out why.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why 4DMedical, Gold Road, Syrah, and Tyro shares are racing higher today

These shares are starting the week strongly. But why?

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

2 ASX gold stocks racing higher in Monday's sinking market

Investors are sending these ASX gold stocks flying higher on Monday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Brainchip, Helia Group, Reliance Worldwide, and Westpac shares are dropping today

These shares are starting the week in the red. But why?

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »