By Lisa Pauline Mattackal and Ankika Biswas

(Reuters) – The S&P 500 hit the psychologically significant 6,000 mark for the first time on Friday, building on a sharp rally after Donald Trump won a second term as U.S. president.

All three major indexes rose to record highs on Nov. 6 following the election results, as analysts expect corporations to benefit from Trump’s plans to cut taxes and regulations.

The S&P 500 was last up 0.43% at 5,998.90.

“The market is reacting to a lower interest rate environment and the fact that we’ve gone through the earnings season and we’ve had a presidential election that wasn’t contested and that went better than I think most people expected,” said Robert Pavlik. senior portfolio manager at Dakota Wealth

“In reality, (the 6,000 level) doesn’t mean much, it’s just confirmation of a good environment and gives investors a reason to be positive.”

The benchmark is up more than 25% this year, gaining steadily since the end of the previous bear market in October 2022.

Steep gains in 2024 were largely fueled by a steep rally in rate-sensitive megacap growth stocks on hopes of lower borrowing costs and optimism around a soft landing for the US economy.

The Federal Reserve cut interest rates for the first time in four years in September, followed by a 25 basis point cut in November. Traders are pricing in another cut this year, according to CME FedWatch.

Information technology stocks fueled the S&P 500’s gains, led by companies such as AI leader Nvidia.

The index took about nine months to add 1,000 points after hitting the 5,000 mark in early February. In contrast, it took nearly three years for the S&P 500 to climb from 4,000 in April 2021 to 5,000.

However, the rise in stocks stretched valuations, with the S&P 500 trading at 22.3 times forward earnings, the highest in two years, compared with a long-term average of 16.

Most major brokerages expect the benchmark to end the year below the 6,000 mark, although Evercore ISI sees it closing at that level.

(Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Arun Koyyur and Anil D’Silva)