S&P 500 hits record high amid rising U.S. fiscal deficit

The S&P 500 reached a new historic milestone, surpassing 7,800 points intraday and closing at 7,798.99. This market surge has been driven largely by the energy sector, which saw gains of nearly 6%, alongside strong performances in the healthcare and financial services sectors.

However, rising fiscal concerns pose a potential risk to this upward trend. The U.S. federal deficit reached $432.3 billion in July, marking its highest monthly level since March 2021. Major contributors to this deficit included Medicare payments of $174 billion and Social Security payments of $141 billion. Additionally, net interest on the debt accounted for $104 billion in July.

Analysts, including Bank of America strategist Michael Hartnett, have warned that increasing national debt—which is approaching $40 trillion—and rising Treasury yields could threaten Wall Street's momentum. For the current fiscal year through July, federal spending has totaled $6.28 trillion, with $1.799 trillion in new borrowing.