The S&P 500 has loved additional stratospheric progress this century. For the reason that first buying and selling day of 2000, the S&P 500 has risen a staggering 297% in worth. To place that into context, the FTSE 100 has grown ‘just’ 20% in that point.

Previous efficiency will not be all the time a dependable information to the longer term. However listed below are a number of the reason why I feel the S&P 500 will proceed to soar.

Stronger financial system

Markets hate uncertainty. And with November’s presidential election on a knife-edge, Wall Road equities may very well be in for a bumpy rise within the subsequent month or so.

Regardless, I nonetheless anticipate US shares to proceed performing strongly over an extended time horizon. That is due to phenomena like America’s giant shopper base, numerous financial system, and important geopolitical affect.

The forecasts stays encouraging for the nearer-term, too. At present the IMF introduced it expects the US financial system to increase 2.3% in 2024. That’s above the 1.3% common rise predicted for superior economies.

And in 2025, US progress is tipped at 1.7%, versus 1.5% throughout the likes of the UK, Germany and Japan. If correct, this might see New York-listed shares outperform abroad shares over the interval.

Attainable greenback drop

The S&P 500 is filled with multinationals that report their earnings in US {dollars}. This may have large benefits for traders.

One perk is that when the greenback weakens, these corporations’ overseas turnover turns into extra priceless as soon as translated again into bucks, boosting their reported earnings. This profits-boosting phenomenon can, in flip, assist to drive share costs increased.

The excellent news (for share traders, no less than) is that the greenback may very well be in for a tricky time trying forward. Analysts at Vanguard, for example, consider there’s a 75% probability the US greenback will depreciate over the following decade, “with a modest decline of 1.1% annualised the more than likely end result“.

Tech focus

The S&P 500’s excessive tech publicity is a serious purpose for its breakneck efficiency since 2000. Encouragingly, the outlook for ‘Big Tech’ stays as shiny at the moment because it was 1 / 4 of a century in the past.

Segments like synthetic intelligence (AI), quantum computing, autonomous autos, inexperienced know-how, and robotics all have important progress potential that might drive the index skywards.

Due to the so-called Magnificent Seven shares, S&P 500 traders have glorious publicity to every of those phenomena. Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, and Tesla collectively account for 31% of the S&P 500’s whole weighting.

Right here’s what I’ve accomplished

In gentle of all of the above, I opened a place within the HSBC S&P 500 ETF (LSE:HSPX) for my Self-Invested Private Pension (SIPP) earlier this 12 months.

This exchange-traded fund (ETF) tracks the efficiency of all of the US inventory market’s 500 largest corporations. And with a 0.09% ongoing cost, it does this at extraordinarily low price.

The fund permits me to seize potential progress alternatives in addition to to successfully handle danger. Its publicity to tons of of various corporations throughout completely different sectors helps me to successfully unfold the hazard.

On the draw back, this ETF incorporates a lot of cyclical shares like banks, shopper items producers, and banks. And so it’s in peril of underperforming throughout financial downturns. Nonetheless, over the long run, I nonetheless suppose it may show a superb funding for me.