2023-06-09 10:14:00
The S&P 500 is now in what Wall Street known as a bull market, which means that the indicator is up at least 20% from its most recent low.
Here are some questions and answers about bull and bear markets.
Why is the bull market represented by a bull?
The nickname for a bull market on Wall Street is “bull market” (bull market) because the bulls charge, said Sam Stovall, director of investment strategies at CFRA. In contrast, a bear market is known as a “bear market” because bears hibernate, so bears represent a contraction of the market.
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When did the new bull market start?
The most recent bull market is considered to have started on October 13, 2022, one day after the S&P 500 closed at its most recent low of 3,577.03 points.
Why has the market gone up?
Mainly because the economy has beaten forecasts by not slipping into a recession, at least not yet.
Markets were reeling last year on concerns about how the worst inflation in decades would affect the economy. Specifically, Wall Street was spooked by the aggressive measures that the Federal Reserve implemented to combat high inflation.
The Fed has raised interest rates to their highest level since 2007, from near zero early last year. The goal was to reduce inflation by slowing down the economy and lowering the prices of stocks, bonds, and other investments. That left many investors preparing for a recession for months, but a surprisingly strong job market has kept the economy afloat.
Meanwhile, inflation has slowed since it peaked in the middle of last year. That has raised hopes on Wall Street that the Fed will stop raising interest rates soon. Both the Dow Jones and the Nasdaq are already in bull markets, having entered them in November and May, respectively.
So is everything okay?
Hardly. The Fed may not be done raising interest rates. Even if rates remain flat at the next meeting, which would be the first time in over a year, the expectation among traders is that the Fed will resume raising in July. The hope is that this will be the last rate hike, but persistent inflation could dash those hopes.
That keeps pressure on the economy in general, and particularly on the banking and manufacturing industries, which have already shown some cracks.
Most of the gains in the S&P 500 this year have come from just a small group of stocks, which critics say is unsustainable. Manzana (+30%), Microsoft (+44%) y Alphabet (+25%), the companies with the highest market values in the S&P 500, have each outperformed the rest of the indicator. Its sheer size gives its moves greater weight within the index, while almost half of the gauge’s stocks have reported losses so far in 2023.
How long does a bull market last in general?
Since 1932, bull markets have lasted an average of almost 5 years, and the S&P 500 experiences an increase of 177.8%. The longest bull market began in March 2009, near the end of the Great Recession, and roamed Wall Street for nearly 11 years.
When was the most recent bull market?
The most recent bull market began on March 23, 2020, while recovering from a bear market blitz triggered by the outbreak of the pandemic. That was the shortest bull market since 1932, lasting about 21 months, according to data from the S&P Dow Jones Indices. Either way, the S&P 500 more than doubled in value (114.4%).
Weren’t we in a bear market?
By entering a bull market, the S&P 500 virtually ended the bear market that began on January 3, 2022. The bear market is officially considered to have ended on October 12, 2022.
Declaring the end of a bear market may seem arbitrary, and different market observers use different definitions, but it offers a useful marker for investors.
How bad was the bear market?
The now defunct bear market lasted for about nine months and recorded a decline of 25.4%. It was quite mild relative to other bear markets. Since 1950, an average bear market has lasted 13 months, in which the S&P 500 fell 34.2%. Since 1929, the average bear market has lasted 19.6 months, with the S&P 500 falling from 39.4%.
Source: AP
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