S&P 500 smashes new record highs and the ASX stock joining the rally

If you own this ASX share, you'll be cheering the new S&P 500 all-time highs.

The S&P 500 Index (SP: .INX) just did it again.

And by 'it', I mean surged to new all-time high territory.

The benchmark US stock market index closed up 0.83% overnight to end Thursday at 6,502 points.

This sees the S&P 500 up 17.8% over 12 months. And the index has rocketed 30.5% since the 8 April lows as investors bought the dip brought on by fears over United States President Donald Trump's tariff campaign.

For some comparison, the S&P/ASX 200 Index (ASX: XJO) is up 11.1% in 12 months and up 20.8% from its own 7 April lows.

The outperformance of US stocks over their Aussie counterparts is a longer-term trend than that.

Ove the past five years, for example, the benchmark US index is up 89.7% compared to the 49.8% gain posted by the ASX 200.

Which brings us to the ASX stock quietly joining the rally.

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today

Image source: Getty Images

ASX stock joins the ride to fresh highs

There are a growing number of exchange-traded funds (ETFs) available on the ASX that are intended to track the performance of various US markets.

For the S&P 500, you might want to look into the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX stock does not provide currency hedging. So your gains or losses will both closely mirror the moves of the US index as well as any movements in the US to Aussie dollar exchange rate.

SPY's largest holdings include Nvidia Corporation (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), and Amazon.com, Inc. (NASDAQ: AMZN).

Shares in the ASX ETF are up 20.5% over 12 months and up 109.8% in five years.

What's driving the S&P 500 to new records?

The S&P 500's overnight leap to new all-time highs looks to have been spurred by weak initial August jobs data out of the US.

With the labour market in the world's top economy apparently slowing, investors have upped their bets on another interest rate cut from the US Federal Reserve when the central bank meets again later this month.

And lower rates, as you know, tend to be a boon for most stocks.

Commenting on the latest look into the US labour market, Will Compernolle at FHN Financial said (quoted by Bloomberg), "Even the most easing-sceptical officials should concede increasing risks of labour-market weakness."

Jamie Cox at Harris Financial Group added, "The Federal Reserve's free pass on the labour market has ended. You can expect the Fed to tilt its balance of risks to cut rates in September."

Chris Larkin at E*Trade from Morgan Stanley cautioned that the S&P 500 rally could stumble if US unemployment trends too high.

Larkin said:

In the short term, markets may embrace that data because it should increase the odds of Fed rate cuts. But if the numbers deteriorate too much, it could raise concerns about the health of the economy.

A detailed US payrolls report will be released overnight.

Stay tuned.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Microsoft, and Nvidia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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