US bull market far from over
TODAY THE S&P 500’S BULL-MARKET RUN WILL TURN 3,453 DAYS OLD, MAKING IT THE LONGEST SUCH STREAK IN HISTORY
S&P 500 rally will turn 3,453 days old today, making it the longest such streak in history
Why settle for nine-and-a-half years when you can do an even 10 or better? That’s the thinking of a lot of investors measuring whether a historically long run in US stocks still has legs.
Today, the S&P 500’s bullmarket run will turn 3,453 days old, which in some market watchers’ eyes will make it the longest such streak in history.
The bull was born in the ashes of the financial crisis and carried along through much of its rise by $3.5 trillion (Dh12.85 trillion) of asset purchases by the US Federal Reserve. The debate now is over when, not if, its run will come to an end.
“Bull markets are like incandescent light bulbs. They tend to glow brightest just before they go out,” said Sam Stovall, chief investment strategist at research firm CFRA.
The record is of some question because Wall Street experts define bull and bear markets differently.
The S&P 500 also would need to hit an all-time high after today to confirm the milestone. As of Friday, the S&P 500 was 0.8 per cent shy of its record high, set on January 26.
If the S&P fails to eclipse that high and drops 20 per cent below it, that would signify instead that stocks have been in a bear market since the January peak.
But many investors are optimistic that the stock market in the near term will avoid a plunge that would end the bull run, in large part because of the US economy’s health.
“True bear markets are associated with recessions,” said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. “I have to ask myself, ‘When do I see a recession?’ I don’t see one around the corner.”
To extend its run, as it has throughout the long march higher, the market would need to shrug off a range of geopolitical concerns, including trade tensions between the United States and its partners, an emerging market rout set off by Turkey’s sliding currency, uncertainty over China’s economy and upcoming midterm elections.
In the United States, while economists see strong growth for at least the next year, investors did point to some concerning signs, including rising corporate debt and shaky housing activity.
Warning signs
“The reality is the economy’s going strong but there is an increasing amount of yellow to orange flashing warning signs out there,” said Oliver Pursche, chief market strategist of Bruderman Brothers in New York.
The market is not far removed from brutal declines stemming from the 1999-2000 internet bubble and 2007-2009 financial crisis, and investors are wary of the timing and extent of the next downturn. For example, while the US corporate tax cuts fuelled equity returns in the past year, some investors worry they eventually could result in a harder landing for stocks.
“Putting in a late-cycle fiscal stimulus... that really sets up the potential for a boom-bust type of scenario,” said Mona Mahajan, US investment strategist at Allianz Global Investors.
The US government has less firepower in a downturn after already cutting taxes significantly, CFRA’s Stovall said. The current bull market is commonly thought to have started on March 9, 2009, when the S&P 500 closed at 676.53 as the United States grappled with the global financial crisis.
Since then, the benchmark US stock index has more than quadrupled, closing Friday at 2850.13.
That makes it the third mostrewarding bull run, trailing only 1932-1937 and 1990-2000, the latter of which the current streak was poised to match in length yesterday, according to S&P Dow Jones Indices.