S&P 500 is officially in a bull market
The S&P 500 rose by 0.6 per cent, closing at at 4,293.93, meaning it crossed the threshold that separates a bear market from a bull market.
There was good news for the S&P 500 at the close of play on Thursday (June 9) as after starting the day in the bear market, it ended in the bull market.
The broad-based index closed at 4,293.93 and crossed the threshold that separates a bear market from a bull market, with the the S&P 500 rising 0.6 per cent, marking a 20 per cent surge since its most recent low, reached on October 12 last year – a bull market is where there is economic growth and optimism among businesses and consumers.
There have been plenty of gains in big technology stocks, with the new AI craze ramping up interest in tech stocks – investors have been placing big bets on Google, Apple, Meta, Amazon, Nvidia and others.
It’s not all sweetness and light, though, with analysts fearing it could be a short-lived rally that ends up biting investors, with inflation still quite high, while consumer spending is not as it was.
“We’re very late in the economic cycle that’s starting to slow and probably heading for a recession later this year,” Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, told CNN.
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“The key difference for us is that you tend to see bull markets coincide with economic expansions, not economic contractions.”
Kevin Gordon, senior investment strategist at Schwab, believes it’s more of a “duck market”, than a bull one, meaning stocks look nice and calm on the surface, but there’s a lot of paddling going on below – the larger stocks are enjoying a boom time, but the smaller companies are floundering.
Meanwhile, Samana added: “Investors should avoid getting sucked into this as a new bull market.
“Keep perspective of what this is, which is a very tantalising bear market rally.”
Chief investment strategist at CFRA, Sam Stovall, pointed towards the Federal Reserve’s interest rate policy decision next week as to whether the S&P 500 stays in the bull market or not.
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Since the Fed started announcing changes in the funds rate in 1989, there have been 16 times during rate hike cycles when the Fed either skipped raising rates or ended its rate-hiking programme altogether.
After the Fed either skipped or stopped hiking rates at one meeting, the S&P 500 rose an average 3.6 per cent and gained in price 88 per cent of the time.
“Should the Fed skip hiking in June, history says, but does not guarantee, that the market has further upside potential,” he said.
