Thursday was another strong day for the stock market, extending the upward streak for major market benchmarks to four consecutive days. In stark contrast to the dour mood heading into the weekend before the U.S. elections, investors now seem to be far more comfortable with their view of what’s likely to play out politically in the near future. That was enough to send the Dow Jones Industrial Average (DJINDICES:^DJI), S&P 500 (SNPINDEX:^GSPC), and Nasdaq Composite (NASDAQINDEX:^IXIC) higher by 2% to 3% on Thursday.
Overall, gains so far in November have been extremely encouraging, reflecting hopes that the U.S. economy will be able to bounce back from the challenges of the COVID-19 pandemic. The fact that investors are willing to bid up stock prices even without any real resolution in sight for the coronavirus crisis is noteworthy, but does it mean we should expect new all-time highs for the Dow, S&P, and Nasdaq soon? Or will markets reverse lower again?
What it would take to get to new records
First of all, amid all the volatility, you might have lost track of where the major market benchmarks are right now in relation to their all-time highs. The Nasdaq Composite is the closest to its record. At 11,891, the index is about 1.5% below its intraday record, and 1.4% lower than its record close on Sept. 2.
The S&P 500 has only a little further to go. At 3,510, it’s a bit more than 2% below its intraday and closing highs from early September.
The Dow has been the laggard of the trio of top indexes, largely because the influence of high-growth tech companies is far weaker among the 30 stocks that make up the industrial average. Closing at 28,390, it’s almost 4% below its intraday record high as well as its closing record on Feb. 12 — just before the coronavirus bear market began.
It therefore wouldn’t take much of a nudge to push all three stock market measures into uncharted territory. However, volatility works both ways — and just as quickly as the market has risen this week, it could give up those gains once again and head lower.
The wrong question to ask
There are compelling arguments on both sides of the debate of whether the stock markets will head higher or lower from here. But the real issue is that if you’re a long-term investor, you don’t really have the right perspective if you’re concentrating on the next short-term move for the Dow, S&P, and Nasdaq.
What 2020 has taught investors is that the right stocks can soar under any circumstances. Companies like Zoom Video Communications (NASDAQ:ZM), Tesla (NASDAQ:TSLA), and Enphase Energy (NASDAQ:ENPH) took advantage of business opportunities available to them, and their stock prices have soared. Their performance has been relatively consistent even as markets have gone in both directions.
Don’t let yourself be concerned about whether markets are headed for a big drop or on the road to further gains. Invest and keep on investing, and you’ll put yourself on track for a successful financial future no matter what happens in the days and weeks to come.
