S&P 500 moves above 5000, attracting investor capital while reducing gold’s allure

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Yesterday the Standard & Poor’s 500 index hit a new milestone trading above 5000 points for the first time in history. Equity traders witnessed another record today with the S&P 500 closing out the week above 5000. Optimism regarding a revision of the December inflation data revealed that inflationary pressures are even lower than the earlier data suggested.

Investors effectively look to move their capital to assets that provide the greatest potential for a high return while also offering a level of risk that is acceptable to them. US equities can contain tremendous risk, which is why the asset classes are titled risk-on. Asset classes that offer stable but low returns such as bonds are a strong alternative when US equities are trading under pressure.

However, the overwhelming capacity of a handful of corporations specializing in the advancement of technology has shifted market participants' focus away from the safety of a haven asset, or the security of a low-risk return government bond.

 

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