The S&P 500 (^GSPC) has been on the run recently, with the Magnificent Seven leading the charge and holding almost 30% of the index's value. Wall Street is arguing over whether the S&P can maintain this momentum into 2024.

Spouting Rock Asset Management Chief Strategist Rhys Williams joins Yahoo Finance to discuss the state of the stock market and whether or not it can continue its recent hot streak into the new year.

Williams puts the current market in a historical context, pointing out a productivity boom in the mid-90s due to "the power of Cisco Technology with the client-server technology and the internet" and makes a parallel with the rapid growth of AI. He argues there is "certainly a strong possibility we're going to have another AI-led productivity boom over the next couple years."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- While investors have been waiting for recession to hit for the better part of the last year and a half, markets remain strong. The Dow as well as the S&P 500 are nearing all time highs. So is it possible that this is just the calm before the storm? Let's welcome in Rhys Williams, Spouting Rock Asset Management Chief Strategist. Rhys, good to see you. Listen, the market has enjoyed a strong rally here. You think too fast, too much, Rhys, or does it make sense to you, and we continue the good times right into 2024?

RHYS WILLIAMS: Our base case is we're going to continue into 2024. However, this has been a strong, strong month and a couple of very strong months. So some pause here in January would not be a surprise. But we do think it does appear that the possibility that we have low inflation and no recession in 2024 could stimulate the market broadening and stocks to do fairly well.

- You know, we keep talking about how we're flirting with record levels for the S&P 500, Rhys. Do you think-- I mean, we're not far from there, but do you think we're going to get there? And then does that run keep going?

RHYS WILLIAMS: I do. And I think the biggest reason that I'm excited about the market is just the power of AI. And I remember 1994 and 1995, the last time interest rates had been risen dramatically, and no recession occurred. And then the reason for that really was the power of Cisco technology with the client server technology and then the internet. So that had a productivity boom, which allowed for a really strong economy, really strong stock market. And as I remember, when we exited the 1990s, we even had a government budget surplus. So I do think that is a possibility, certainly a strong possibility that we're going to have another sort of AI-led productivity boom over the next couple of years.