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| Wall Street poised to set record for longest bull run in history | Wall Street poised to set record for longest bull run in history |
| (about 2 hours later) | |
| US stock markets passed another landmark on Wednesday as the S&P 500 recorded its longest rally ever, capping a near decade-long Wall Street boom that has gathered pace over the course of this year. | |
| The S&P 500 share index, tracking the 500 biggest public companies in America, closed trading on Wednesday having gone 3,453 days – nearly nine and a half years – without a fall of 20% or more, which is the measure used by some analysts for handing it the status as the longest bull market in US history. | |
| The record was set with more of a whimper than a roar. The S&P 500 dipped 1 point to 2,861 for the day while the Dow Jones Industrial Average fell 88 points, or 0.3%, to 25,733 and the Nasdaq composite rose 29 points, or 0.4%, to 7,889. But records were set nonetheless. | |
| Having started in March 2009, following the financial crisis, the longest market rally comes as the global economy continues its recovery from the depths of the last recession. Although there have been numerous wobbles in the past 10 years, including a sharp correction earlier this year, when S&P fell 10% over two weeks after its January high, the milestone comes with help from corporate tax cuts and the rise of internet companies such as Apple, Amazon and Google’s owner, Alphabet. | Having started in March 2009, following the financial crisis, the longest market rally comes as the global economy continues its recovery from the depths of the last recession. Although there have been numerous wobbles in the past 10 years, including a sharp correction earlier this year, when S&P fell 10% over two weeks after its January high, the milestone comes with help from corporate tax cuts and the rise of internet companies such as Apple, Amazon and Google’s owner, Alphabet. |
| A loose definition is that a stock market switches from a bear to a bull phase when share prices have risen 20% from the previous low. The bull market continues until there is a 20% decline from the peak, when stocks go back into bear mode. | A loose definition is that a stock market switches from a bear to a bull phase when share prices have risen 20% from the previous low. The bull market continues until there is a 20% decline from the peak, when stocks go back into bear mode. |
| One theory explaining the stock market terminology comes from the way both animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes downward. | One theory explaining the stock market terminology comes from the way both animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes downward. |
| The previous record bull run started in October 1990, lasting almost a decade until the dotcom bubble burst around the turn of the millennium. There are, however, disputes over the starting point, which could render celebrations over the latest milestone premature. | The previous record bull run started in October 1990, lasting almost a decade until the dotcom bubble burst around the turn of the millennium. There are, however, disputes over the starting point, which could render celebrations over the latest milestone premature. |
| The US Financial Industry Regulatory Authority reckons the tech rally began in 1987, rather than 1990, meaning the current bull market would need to continue until at least the summer of 2021 to break the record. | The US Financial Industry Regulatory Authority reckons the tech rally began in 1987, rather than 1990, meaning the current bull market would need to continue until at least the summer of 2021 to break the record. |
| Some analysts argue that bull and bear market status is unclear, not set in stone, and that identifying the positions reflects an unhealthy obsession with arbitrary turning points in financial markets. | Some analysts argue that bull and bear market status is unclear, not set in stone, and that identifying the positions reflects an unhealthy obsession with arbitrary turning points in financial markets. |
| The S&P 500 was little changed in trading on Wednesday afternoon, hovering around 2,862 points, within touching distance of the record high reached in January. Among the best performers so far this year are Netflix, Twitter, and the watchmaker Fossil. | The S&P 500 was little changed in trading on Wednesday afternoon, hovering around 2,862 points, within touching distance of the record high reached in January. Among the best performers so far this year are Netflix, Twitter, and the watchmaker Fossil. |
| The latest milestone comes as the US economy goes through its second longest-ever unbroken expansion, helped by low interest rates set by the Federal Reserve and sluggish inflation. | The latest milestone comes as the US economy goes through its second longest-ever unbroken expansion, helped by low interest rates set by the Federal Reserve and sluggish inflation. |
| Having collapsed during the crisis and still gradually recovering, stock markets have also benefited from the world’s biggest central banks pumping billions into their economies through quantitative easing. | Having collapsed during the crisis and still gradually recovering, stock markets have also benefited from the world’s biggest central banks pumping billions into their economies through quantitative easing. |
| The rise of the tech firms has boosted the overall value of the US stock market. The five so-called Faangs – Facebook, Amazon, Apple, Netflix and Google – are together worth more than $3tn, a sum that makes them more valuable than the entire FTSE 100. | The rise of the tech firms has boosted the overall value of the US stock market. The five so-called Faangs – Facebook, Amazon, Apple, Netflix and Google – are together worth more than $3tn, a sum that makes them more valuable than the entire FTSE 100. |
| Donald Trump’s corporate tax cuts have boosted US corporate profits, helping to drive the stock market higher. The president celebrated stocks reaching record levels earlier this year, tweeting: “Dow just crashes through 25,000. Congrats! Big cuts in unnecessary regulations continuing.” | Donald Trump’s corporate tax cuts have boosted US corporate profits, helping to drive the stock market higher. The president celebrated stocks reaching record levels earlier this year, tweeting: “Dow just crashes through 25,000. Congrats! Big cuts in unnecessary regulations continuing.” |
| The bull market run has however included sharp corrections – when shares fall by at least 10% – although it maintained its status because the declines did not exceed 20%. | The bull market run has however included sharp corrections – when shares fall by at least 10% – although it maintained its status because the declines did not exceed 20%. |
| Little more than a month after the US president’s tweet, the Dow Jones Industrial Average plunged by more than 1,000 points amid fears over rising inflation that could have prompted the Fed to raise interest rates faster than expected. Concerns over a global trade war instigated by Washington have also rocked markets in recent months and could still pose a threat. | Little more than a month after the US president’s tweet, the Dow Jones Industrial Average plunged by more than 1,000 points amid fears over rising inflation that could have prompted the Fed to raise interest rates faster than expected. Concerns over a global trade war instigated by Washington have also rocked markets in recent months and could still pose a threat. |
| Analysts said US stocks could continue rising over the course of this year, although warned against placing faith in arbitrary definitions of strength, such as markets having risen for a period or reaching certain levels. | Analysts said US stocks could continue rising over the course of this year, although warned against placing faith in arbitrary definitions of strength, such as markets having risen for a period or reaching certain levels. |
| Andrew Milligan, head of global strategy at Aberdeen Standard, said: “Is there any reason for this trend in US equities to fade? Not quickly. We still expect strong growth in US economy next year, helped by the tax cuts. There are risks. The Fed could tighten too much, China could lose control of its debt problems, or Italian bonds could cause another sovereign debt crisis.” | Andrew Milligan, head of global strategy at Aberdeen Standard, said: “Is there any reason for this trend in US equities to fade? Not quickly. We still expect strong growth in US economy next year, helped by the tax cuts. There are risks. The Fed could tighten too much, China could lose control of its debt problems, or Italian bonds could cause another sovereign debt crisis.” |
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