S&P 500 Surges 1.5 Trillion, Fed Easing Drives 27.7 Billion Share Volume

On a day marked by the expiration of 500 billion dollars in options, known as the "triple witching day," the U.S. stock market saw a significant surge in trading volume, reaching approximately 27.7 billion shares. This volume is the third-highest single-day trading volume since records began in 2008. The surge in trading activity pushed the S&P 500 index to briefly surpass 6,660 points, driven largely by gains in the technology sector. Since hitting a low in April, the market value of the S&P 500 has increased by nearly 1.5 trillion dollars.

The Federal Reserve's signal of continued easing has provided a supportive backdrop for this surge. The central bank's decision to restart rate cuts has been a key driver, with Federal Reserve Chair indicating that rate decisions will be made on a meeting-by-meeting basis. However, market participants are still betting on nearly two rate cuts by 2025, according to derivatives market data.

Analysts generally agree that the Federal Reserve's actions have set a bullish tone for the stock market. Some experts predict that after a brief period of consolidation, the market will continue to rise. Large-cap technology stocks in the U.S. are seen as having further upside potential, and investors are advised to prepare for additional gains. This optimism is reflected in the flow of funds, with global and U.S. stock funds experiencing significant inflows in the week ending September 17.

However, there are also voices of caution. Some analysts point out that the current market environment, with high valuations and suppressed volatility, could lead to a period of consolidation or volatility. This view is supported by the fact that the number of bearish investors has exceeded the number of bullish investors for seven consecutive weeks, indicating a divergence between investor sentiment and market performance.

The upcoming earnings season is also expected to provide support for the stock market. Data shows that more than 22% of S&P 500 companies that have provided third-quarter earnings guidance expect to exceed analyst estimates, the highest proportion in the past year. Additionally, the proportion of companies reporting earnings below expectations has fallen to its lowest level in four quarters. This suggests that the high valuations in the stock market are supported by a solid fundamental outlook, which gives investors confidence in maintaining an overweight position in stocks.

Historically, the Federal Reserve's easing cycle has supported the stock market in a non-recessionary environment. With support from artificial intelligence, corporate earnings, and consumer spending, the stock market is expected to continue to rise. However, investors should be aware of the risks and uncertainties in the market and make investment decisions based on their individual circumstances and risk tolerance.