S&P 500 Reaches New Peak, But Rally's Expansion Debated by Analysts

The S&P 500 reached a new intraday high of 7,844.52 on Tuesday and ended above 7,800 for the first time. This came one day after the 10-year Treasury yield exceeded 5.3%, reaching levels not seen since 2002.

The S&P 500 fell 0.3% in September, while its equal-weight version, which treats each stock equally, dropped 4.8%. Janus Henderson reported that large-cap tech gains hid the underlying weakness.

Can the S&P 500 Record High Spread to Beaten-Down Sectors?

A group of money managers on CNBC’s Halftime Report debated whether the rally can extend beyond big tech.

Stephanie Link of Hightower Advisors said industrials, financials, utilities and materials now offer good value. The same Janus Henderson data shows financials and materials each fell about 7% in September.

Link pointed to Tuesday’s 20-year nuclear power agreement between Google and Constellation Energy, whose shares rose more than 12%. She anticipates improved backlogs and orders for power and grid companies.

Link also believes the consumer remains resilient, and noted that lower rates and oil prices would make her more optimistic.

Jenny Harrington of Gilman Hill Asset Management said the selloff affected entire sectors regardless of individual companies’ interest-rate exposure. Her equity income strategy targets a yield of 5% or higher.

Kevin Simpson of Capital Wealth Planning said the broadening depends on energy prices. Lower oil could reduce inflation and relieve pressure on the Fed.

Will More Fed Hikes Stall the Rally?

In mid-September, the Fed delivered its first rate hike in over three years, and officials signaled additional increases ahead, according to CNBC.

Simpson, who remains cautious, argued that one more hike in December could end the cycle if oil and inflation decline. In that scenario, 5.3% on the 10-year yield might be the peak.

Bryn Talkington of Requisite Capital Management said expectations of multiple additional hikes would halt any broadening.

Earnings season kicks off next week, Talkington noted, and she expects tech and energy to lead it. She estimated that Nvidia and Micron will provide one-third of S&P 500 earnings growth.

This concentration means the broadening case relies on profit growth outside AI hardware.