Take a look at your 401(k). The S&P 500 and Dow just hit record highs.

The S&P 500 index ended last week at a record high, welcome news for Americans’ retirement accounts.

The benchmark index closed up 1.2% Friday to beat its previous record from January 2022. The Dow Jones Industrial Average – which surpassed its 2022 peak last month – also closed at a new record Friday, and the Nasdaq Composite climbed 1.7%.

People walk by the New York Stock Exchange (NYSE) on January 19, 2024 in New York City. Stocks closed up over 350 points while the S&P 500 closed at an all-time high on Friday.

The milestones follow major stock market declines in 2022, Wall Street’s worst year since the Great Recession. At the time, investors were concerned about high inflation, high interest rates and a potential recession, and the S&P 500 dipped about 20%.

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“It took more than two years, but the S&P 500 finally made it back to new all-time highs,” said Ryan Detrick, chief market strategist at financial services firm Carson Group. “This is a great reminder to investors that although we’ve seen many worries and concerns over the past two years, investors are usually rewarded over time.”

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Why are stock markets up?

Tech stocks helped push the S&P 500 to new heights Friday, with chipmaker Nvidia up 4.2%, Texas Instruments gaining 4% and semiconductor giant Broadcom rising 5.9%.

Sam Stovall, chief investment strategist at investment research and analytics firm CFRA Research, noted that tech companies have done a good job of managing expectations in recent quarters. Now, he said, investors may be thinking that Wall Street is “underestimating the kind of growth that we are likely to see” from semiconductor and other tech stocks.

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What is the record high for the Dow Jones?

The Dow Jones Industrial Average ended Friday at a new record high: 37,863.8.

Traders work on the floor of the New York Stock Exchange (NYSE) on January 19, 2024 in New York City. Stocks closed up over 350 points while the S&P 500 closed at an all-time high on Friday.

What is the record high for the S&P 500?

The S&P 500 – widely used as a benchmark for large stocks and index funds – closed at 4,839.81 on Friday.

What does this mean for me and my 401(k)?

The record-high S&P 500 is a boost to investors’ retirement plans. It’s also a sign of investor confidence in the economy’s future.

Detrick pointed to signs like strong consumer spending, a healthy labor market, slowing inflation and a Federal Reserve that’s expected to start cutting interest rates this year.

Stovall added that investors would not be buying if they felt the economy heading for a recession. (Forecasters say there’s a 42% of a recession this year, according to a recent survey from Wolters Kluwer Blue Chip Economic Indicators. That’s down from previous forecasts but still a historically high risk.)

But “markets tend to go up when investors and analysts think that there is a potential for recovery,” Stovall said. “(It’s) basically saying we think better times are ahead.”

While there’s a chance the stock market could falter if high inflation and interest rates prove to be more stubborn than anticipated, Stovall said the current rally is likely to continue if it follows previous stock market trends.

“The market does not tend to just roll over and die from exhaustion,” he said. “After recovering all that it lost, it tends to advance another 5.2% over two-and-a-half months before falling into a decline of 8.2% on average.”

This article originally appeared on USA TODAY: Take a look at your 401(k). The S&P 500 and Dow just hit record highs.