Chart of the Week

Don’t fear investing at new highs

July 8, 2025

Time to Read: 3 min

The S&P 500 recently hit another all-time high. Is it therefore time to exercise more caution? Not in our view. We see the potential for further upside, and history is on our side.

It has certainly been a volatile first half of the year for equity markets with uncertainty around tariffs and the administration’s other policies weighing on investor sentiment. From February 19 to April 8, the S&P 500 fell a notable 19%, skimming the surface of bear market territory. However, since then the index has risen 26% to a new all-time high on July 3.

While some investors may not feel comfortable buying when markets are at new highs, history shows there is little difference between future returns following a new all-time high and future returns following any other day when the market has not registered a new high. Since 1950, the S&P 500 has delivered strong returns in the forward 1-, 3- and 5-year periods from a new all-time high. The reason is the day of an all-time high is just like any other trading day, and investors are best served by viewing them all through the same lens.

Don’t let fear of all-time highs keep you on the sidelines or you’re bound to miss out. Rather, stay invested and diversified and maintain a long-term perspective. That’s the most effective way to build wealth.

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Healthy correction?

After climbing 17% year to date through late October, the S&P 500 declined 5% through November 20. We believe the market was due for a healthy correction. While further downside is possible, it would not concern us.

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The global economy is holding up

This past year was rife with risks to the global economy: policy changes, tariff uncertainty and more. Yet, the global economy held up as manufacturing and services activity strengthened across the world. We see an opportunity for U.S. investors to diversify geographically.

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Retail sales remain resilient

Considering the slowing job market, we dove into retail sales data to search for signs of the direction of household spending. We analyzed existing-store sales and found that, despite the softening labor market and concerns about growth, aggregate consumer spending remains resilient.

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Bullish on Fed easing?

As expected, the Federal Open Market Committee delivered another 25-basis point rate cut. Investors are now focused on the pace of cuts from here. However, the more important driver of future equity returns is whether the Fed is easing into an economy that is growing or not.