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What does Wall Street's new milestone mean for everyday Americans?

Wall Street hit its latest record Friday amid a slew of winning weeks, but what does it actually mean for your investments?
What does Wall Street's new milestone mean for everyday Americans?
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For the first time in history, the S&P 500 opened above the 5,000 milestone Friday, continuing the upward trend that has taken root the past 14 weeks.

This is the 10th record in less than a month for the index, marking a positive sign for investors and for everyday Americans who might have retirement savings tied up in the market.

And while it's important to note the stock market isn't an exact barometer of how the American economy is performing, it often serves as a mark of increased consumer confidence in its state.

So what does this news really mean for the average American?

"It adds to their net worth so when they go to apply for a loan, they'll be able to conceivably get more to start that business," said Joe Wilson, personal finance expert. "So, it has some real, practical applications if you're willing to take advantage of it."

SEE MORE: Gold prices expected to surge when interest rates fall

According to Fidelity, the average IRA balance was $109,600 in Q3 2023 — an 8% increase from a year ago and a 28% increase from 10 years ago. The average 401(k) balance was $107,700 — an 11% increase from a year ago and 27% increase from 10 years ago.

"The biggest impact is all psychology," Wilson said. "People are feeling much, much wealthier, and as a result of that, it's almost a self-fulfilling prophecy. You're feeling wealthier, you feel comfortable to go out there and purchase more goods and services, and as a result of it, those same companies that are currently reaching new record highs are just going to go even higher theoretically. And people are going to continue to spend as long as they feel wealthy."

This also plays into interest rates that have been such a hot topic over the last year-and-a-half. 

According to market data, the probability of a U.S. rate cut as early as May now stands at just 39%, when it was considered a done deal only a week ago.

But even though there's a lot of good, it's important to remember the market is always set to change.


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