Author: Vitaly Akhmedkhanov, Analyst at Ost Capital Investment Fund
Stock indices have surged significantly. The S&P500 is currently trading at $4584. This is a very good rebound from the minimum, as the minimum was reached on January 24th at $4219. A gain of 370 points is an excellent outcome. This is due to the fact that one-third of the companies in the index have already reported, and many of them have exceeded earnings expectations. This contributes to the market’s growth. For example, AMD’s actual earnings exceeded expectations by 47%, helping their stocks rise by more than 14%. However, we are still awaiting reports from some important companies, such as Alphabet and Meta.
I know that many have long wanted to sell the S&P500 and other indices. Popular arguments include the Federal Reserve’s support for tight monetary policy, suggesting that the stock market is likely to decline. Yes, in January, the S&P500 fell by 500 points, but we should not expect a sharp decline now.
What is the S&P 500 index?
This is a stock index consisting of 500 public companies with the highest market capitalization on U.S. exchanges.
The U.S. stock market and its indices are not as dependent on the situation in America itself—it is important to consider the position on major sales markets as well. An additional advantage is that the U.S. dollar is losing its positions, which also contributes to the growth of the stock market. Therefore, even if the U.S. dollar appreciates extremely, it still cannot drastically crash the indices. Yes, due to USD deflation, they will cost less, but this still does not affect the overall final value—the list of companies in the S&P500 is international. This is a guarantee of protecting the index from a sharp decline. It is highly unlikely that S&P500 stocks will fall to 3000 points. At the moment, I would aim to buy it.
Another reason to invest in the stock market is the upcoming 1:20 split of Alphabet shares. Over the past three days, the company has shown good growth, and on February 2nd, the share price was $2753. Agree, the price is not small. Therefore, the company decided to split—splitting all shares by 20. Yes, the price per share will decrease by 20 times, but if you previously owned only one share, now you will have an additional 19 shares. Alphabet’s market capitalization will not change, but the number of shares will increase by 20 times. This contributes to the influx of new market participants, as replenishing their portfolio with their shares will become cheaper and easier. We can expect a price in the range of $850-890 per share.
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