Bull market, soon to be longest, has room to run

Despite numerous scares, no sign of bears

Stamping an expiration date on the bull market for stocks that began almost a decade ago has proven to be a losing proposition.

The long, upward rise in U.S. stock prices that began in March 2009 near the end of the Great Recession – a rally that survived countless scares and was doubted every step of the way by market skeptics – is about to surpass the famed surge from the 1990s as the longest-running bull in Wall Street history.

No bull market lasts forever, of course, and Wall Street pros are on the lookout for signs of this one’s eventual demise. But the upward climb for the Standard & Poor’s 500 stock index, which on Wednesday is almost certain to reach a record-breaking 3,453 calendar days without suffering a 20 percent drop, could keep going.

The main drivers pushing share prices even higher, market experts say, are a U.S. economy powering along at its fastest clip since 2014, companies growing their profits at the best pace in eight years and the nation’s jobless rate now at an 18-year low.

Those forces propelled the market’s broadest gauge, the S&P 500, to an alltime intraday high on Tuesday. It briefly topped its previous record close of 2,872.87 from January. After hitting a peak of 2,873.23, the index closed up 0.21 percent at 2,862.96.

“At a 10,000-foot level, those economic numbers are a positive for risky assets like stocks,” says Dubravko Lakos-Bujas, chief U.S. equity strategist at J.P. Morgan in New York.

The boost from tax cuts for businesses and everyday Americans, he adds, should persist at least into the middle of next year. That could offset obstacles and possible bull-market killers: trade disputes between the U.S. and its trading partners and the Federal Reserve’s ongoing push to lift interest rates back to more normal levels after pegging them near 0 percent for seven years after the 2008 financial crisis.

During this bull run, the S&P 500 has posted a gain of nearly 325 percent,overcoming all kinds of shocks, from government shutdowns and the U.S. losing its AAA credit rating, to natural disasters and threats of nuclear war. The 1990s bull, which delivered a 417 percent gain to investors before flaming out in March 2000 when the internet stock boom went bust, is still No. 1 when it comes to performance.

The gains in recent years have been powered by innovative tech companies such as iPhone maker Apple, online retail giant Amazon and video streaming service Netflix, whose products have changed the way Americans communicate, shop and watch movies. The S&P 500’s tech sector has accounted for more than 22 percent of the index’s bull market gains, according to S&P Dow Jones Indices.

After being burned during the last bear market when stocks lost more than half their value, many Americans who fled the market never went back. More than 40 percent of them polled by Gallup in April said they had no money invested in equities. But the 55 percent who stayed the course turned a $10,000 investment in the S&P 500 at the start of the bull into roughly $42,500. That’s a profit of more than $30,000. But while there are plenty of risks to worry about, don’t count out the aging, graying bull just because it has lived longer than all those that came before it.

“The idea that just because the market has been going up for a long time means it has to go down, there is no historical support for that idea,” says Charlie Bobrinskoy, vice chairman and head of investments at Ariel Investments, a Chicago-based fund company.

What could keep the bull going?

Despite the bull being on the precipice of rewriting the record books as the longest ever, many of the things that have killed past bull markets are absent – at least for now.

For one, stock prices are not ridiculously expensive like they were at the market peak in 2000, when stocks in the S&P 500 were trading at more than 26 times their past 12-month earnings. Currently, the market’s price-to-earnings ratio,or P-E, is around 19, just a shade above the 30-year average of 17.6, according to earnings-tracker Thomson Reuters.

“There are times when the market is ridiculously cheap or expensive, but now is not one of those times,” Bobrinskoy says