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The S&P 500, the benchmark index that investors tend to rely on as a proxy for the U.S. stock market, topped 3,000 for the first time on Wednesday.

The index breached the level just after the market opened, after comments from Federal Reserve chairman Jerome Powell reassured traders about an impending interest rate cut from the central bank.

The S&P pulled back from the mark during the session, and was up 0.42 per cent in mid-afternoon trade near 2,992. But just trading over the 3,000 mark could be a watershed that adds fuel to a market that has been breaking to record highs this year.

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“Seeing all-time highs with that 3,000 will potentially get more investors interested in the market,” said David Mazza, head of product at Direxion Investments in New York.

“If this kind of psychological effect brings investors back into the market, it could provide support that hasn’t been there to continue this run,” Mazza said.

The index, which includes U.S. companies with large market values, took less than five years to climb 1,000 points. The S&P closed above 2,000 for the first time on Aug. 26, 2014.

By contrast, the ascent from 1,000 to 2,000 required more than 16 years – and included two recessions.

Of course, while equal in points, the 1,000-point leaps were far different by percentage. The latest run to 3,000 represented a 50 per cent gain, while the 1,000 to 2,000 gain represented a doubling of the index.

Graphics by Lewis Krauskopf/Reuters

Some of the market’s most prominent names are also among the best-performing stocks as the S&P climbed its latest 1,000-point mountain. Amazon.com shares have surged about 490 per cent over that time, while Netflix’s stock price has soared 450 per cent.

The S&P 500 milestone “points to the strength of the economy, to the strength of companies and how they’re growing,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

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“It specifically speaks to the growth in technology and how companies in all industries are using technology to drive down costs and improve their products,” Ghriskey said.

Lewis Krauskopf/Reuters

The technology and consumer discretionary sectors have also propelled the S&P 500 in 2019, as the index has climbed more than 19 per cent, rebounding from its swoon at the end of last year.

Investors say much of this year’s gain for stocks has stemmed from a change in outlook for the Fed to be more dovish on interest rate policy.

But there has still been significant outflow from equities over the past year, said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.

“Despite the new highs in the market, market sentiment has been relatively sour,” Lerner said. “But if we stay above (3,000), some people who had moved to the sidelines will start to come back into this market.”

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