Is It Safe to Buy Stocks With the S&P 500 Near Its Record High? History Gives a Surprising Answer

The S 500 (SNPINDEX: ^GSPC) advanced 10.2% during the three-month period that ended in March, notching 22 record highs along the way. That was the index's strongest first quarter since 2019, and its second-strongest first quarter of the past decade. Those gains were primarily driven by rate-cut hopes.

To elaborate, investors initially expected the Federal Reserve to cut rates at least three times this year. They piled into the stock market on the premise that lower rates would stimulate economic growth and boost corporate earnings. However, those rate-cut hopes were diminished by stubborn inflation last month. That caused the S 500 to tumble 4.2% in April, snapping a five-month win streak.

Even so, the S 500 -- often seen as a benchmark for the entire U.S. stock market -- still trades within 2% of its record high. That makes some investors nervous. They worry that the proverbial "other shoe" is bound to drop at some point. But somewhat surprisingly, history tells a different story. Consider this recent commentary from analysts at JPMorgan Chase:

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Source Fool.com