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S&P 500 poised to record the longest bull run in Wall Street history

posted onAugust 22, 2018
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The U.S. bull market will turn 3,453 days old on Wednesday, which in some investor's eyes makes it the longest such streak in Wall Street history. 

The S&P 500, the broadest of the three main stock indexes in the United States broke through its previous record of 2,872.87 in afternoon trading on Tuesday to as high as 2,873.23 before falling back to end the day up 0.2 per cent at 2,862.96.

Since the S&P 500's financial crisis low on 9 March 2009, the benchmark index of large U.S. companies has gone more than nine years without sinking into a bear market - a fall of more than 20% from its 52-week high.  

The S&P 500 has climbed more than 320% over that period. The previous record bull run was set between Oct. 1990 and March 2000 when the index had surged 417%.

Market experts say the gains in recent years have been powered by a slow-but-steady economic recovery,  growing corporate profits and the nation's unemployment rate now at an 18-year low. 

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, which compiles the S&P 500.

Apple is responsible for 4.1 percent of the S&P 500’s return since March 9, 2009, more than any other company, followed by Microsoft with a 2.4 percent contribution, according to Silverblatt. 

S&P 500 company earnings are expected to rise 23.3 per cent this year and another 10.1 per cent in 2019, according to Thomson Reuters.

However, during this bull run, there have been bumps along the way: from government shutdowns and the U.S. losing its AAA credit rating in 2011, to dramatic crash in oil prices, natural disasters, the feared collapse of the euro, threats of nuclear war and China's alarming economic slowdown. 

The remarkable run survived all those panic attacks from crisis-scarred investors along the way. But no bull market lasts forever. 

NYSE

The boom-to-bust scenario 

Weighing on investors minds are fears of a worsening of the trade dispute between the U.S. and China,  more coming rate hikes from the Federal Reserve and worries about  turbulence in emerging markets such as Turkey where the lira has been sliding.

"Bull markets don't die of old age. They end in recessions," Kurt Spieler, chief investment officer of wealth management at First National Bank of Omaha told CNN.

“The biggest risk to the bull market is that it is being temporarily and artificially supported by a powerful combination of a decade of easy monetary policy and a massive fiscal stimulus package recently,”  Michael Arone, chief investment strategist at State Street Global Advisors told The Financial Times.

“That has enabled investors to tolerate higher-than-normal valuations and boosted economic growth and corporate profits. As monetary policy conditions tighten and these temporary stimulative effects of fiscal policy wane, it puts the bull market at risk,” he added..

“Bull markets are like incandescent light bulbs. They tend to glow brightest just before they go out,” Sam Stovall, chief investment strategist at research firm CFRA told Reuters.

Will the market shrug off a range of geopolitical concerns including trade tensions between the United States and its partners, an emerging market rout uncertainty over China’s economy and upcoming midterm elections? Time will tell.