The S&P 500 is the most popular index with approximately $4.6 trillion of assets indexed to it. The index was formed in 1957. The S&P 500 is a market capitalization-weighted index that invests in the top 500 U.S. companies based on their market capitalization. The index is seen as the most appropriate indicator of the U.S. stock markets. While the S&P 500 fell sharply in the first quarter of 2020, it rose every month after March and hit a record high. What’s the S&P 500’s all-time high in 2020?
What's the S&P 500's highest closing?
The S&P 500 closed at 3,580.84 on Sept. 2, which was its highest closing ever. However, the index has looked weak since then. The S&P 500 looks on track to close in the red in September. After the crash in February and March, U.S. stock markets closed in the green every month. However, the tide seems to be turning in September led by sharp losses in tech stocks. Overall, the tech sector has been the best performing sector in 2020.
What is the the S&P 500's all-time high?
While 3,580.84 is the record closing high for the S&P 500, its all-time high is 3,588.11, which it hit intraday on Sept. 2. The S&P 500 made several new all-time highs this year. The index hit new all-time highs in February. However, rising concerns about the COVID-19 pandemic triggered a sell-off in U.S. stock markets. The S&P 500 entered into a bear market and ended a record 11-year old bull market that started in 2009 after the Global Financial Crisis.
In August, the S&P 500 hit record closing highs for five consecutive trading sessions between Aug. 21 and Aug. 28. A wave of global liquidity combined with lockdowns lifting globally helped propel U.S. stock markets to all-time highs.
While the S&P 500 surged to all-time highs, it wasn’t backed by a commensurate growth in earnings. As a result, the index's valuations are now running far ahead of historical averages. In a report published on Sept. 18, FactSet said that the S&P 500’s NTM (next 12-month) PE ratio is 21.7x. In comparison, the S&P 500’s average NTM PE ratio has been 17.1x over the last five years and 15.4x over the last 10 years.
While there's concern about the soaring valuations, they should be seen in the context of the overall accommodative fiscal and monetary policies. The U.S. Federal Reserve has indicated that it might not raise rates until at least 2023. Low bond yields make stocks attractive. Positive progress in fighting the COVID-19 pandemic could also help U.S. stock markets going forward.
How to buy the S&P 500 index versus ETFs
In this year’s annual shareholder meeting, Berkshire Hathaway chairman and famous value investor Warren Buffett called the S&P 500 a “cross-section of America.” He said that investors who aren't equipped to buy stocks should invest in S&P 500 funds.
Now, there are several ways you can invest in the S&P 500. One approach is to buy all of the stocks in the index. However, an easier and more efficient way would be to look at ETFs or index funds that track the S&P 500. ETFs charge a low fee and don’t have minimum investment commitments. You can choose from any of the best S&P 500 ETF.