The stock market on Wednesday logged another historic first, reaching the record milestone of the nation's longest run as a bull market. Robust corporate earnings, a booming economy, and a tax code overhaul continue to fuel the market’s upward trajectory after the financial doldrums that followed the Great Recession, and all this despite an escalating global trade war over tariffs and investor uncertainty as President Donald Trump distances himself from close aides facing a panoply of criminal charges. Wednesday marked 3,453 days since the S&P 500 hit its trough on March 9, 2009. It will be the longest period in which the index, which measures America's largest 500 public companies, has gone without a fall of 20 percent or more. By market close on Wednesday, the index will have risen almost 325 percent since its low point in 2009. Like the Dow Jones Industrial Average hitting 25,000 for the first time earlier this year, the symbolic milestone has been sustained by a confluence of economic policies and events. “The markets, in the long run, really are based on two things — expectations of future interest rates and expectations of future earnings growth. Both are very positive right now,” said Dan North, chief economist at Euler Hermes North America. Economists say the duration of the economic expansion is correlated to the types of companies that have propelled the market higher, and what that telegraphs to investors about the prospect of future growth. “A lot of this bull market has been driven by technology stocks,” North said. “They have accounted for a significant amount of the gains, especially the past few years — and that is typical. Tech is typically where you see some of the strongest growth and that’s where America competes very well,” he said, due to the sector’s reputation for invention and innovation. Technology shares the limelight with a few other industries. “Consumer discretionary has massively outperformed the S&P 500 by far, followed by technology and then financials after that. If you look at these types of things that have driven the overall economy, it makes sense,” said Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute. Ironically, Wren said the recovery’s slow start may have extended the lifespan of this run. “In this particular cycle, it’s taken so long to play out over such a long period of time that things like the consumer discretionary sector have been able to hang on,” he said. Economists also point towards Washington as a driver of the market run-up. Euler Hermes’ North said a combination of strong earnings growth and a tax-cutting, deregulating administration in Washington is fueling the continued confidence of investors and corporate leaders. “Clearly, the level of fiscal stimulus from both the tax reforms and the size of the budget deficit are adding fuel to the economy,” said Tony Roth, chief investment officer at Wilmington Trust Investment Advisers. “We’ve never seen a budget deficit like that outside of a recessionary period in the post-war era,” he said. “The budget deficit and the tax reform have had very upward impact on the economy.” This shot in the arm could come at a cost, though; economists warn that such short-term stimulative effects are unlikely to be sustainable over the long haul, as the U.S. Treasury faces the prospect of servicing an ever-escalating debt load with rising interest rates. “Of course there’s a long-term risk. It creates instability in the economy, given the ability of the country to bear that much debt,” Roth said. Interest rates are a concern more broadly, said Mitchell Goldberg, president of ClientFirst Strategy. “Interest rates are the most important determinant in securities valuation and market valuation,” he said. The Federal Reserve has to pull off a delicate balance, and a misstep could lead to a major economic stumble. “The greatest risk is that long-term interest rates get out of hand and we see a rapid ascent in the 10-year [Treasury bond] to 4.5 or 5 percent," Goldberg said. "That changes everything and it doesn’t matter how good corporate earnings are, it doesn’t matter at that point how high GDP is, because it changes how stocks are valued, it compresses price-to-earnings ratios and it makes dividends less compelling. It’s a real needle to thread.” Rising interest rates don’t just make investors nervous. They make it harder for Americans to fund the kind of debt-driven purchases that tend to spur other categories of consumer spending. Dwight Johnston, chief economist at the California Credit Union League, said there are signs that the type of consumer spending that led the recovery — homes and vehicles — may have reached a peak. “Those two recoveries were a big part of it,” he said. “That started helping confidence on the part of businesses and individuals that maybe the worst was over.” Ultimately, a crisis of confidence might be what endangers the life of this aging bull, Johnston warned. “Auto sales have plateaued, and look at the housing market — it’s plateaued,” he said. “If they don’t keep generating higher and higher levels of growth, people get worried.”<doc-sep>Age is just a number. With the stock market attaining the crown of the longest-running bull market in modern financial history, investors should not fret over the milestone but should focus on the solid underpinnings driving the run. The current bull market rally, which started March 9, 2009, became the longest one on record since World War II on Wednesday by avoiding a 20 percent or more decline, according to S&P Dow Jones Indices. The market has risen more than 300 percent since its low nine years ago. On Tuesday, it tied the rally from 1990 to early 2000, which totaled 3,452 days, and hit a record high. (There's only one caveat: if the stock market failed to rise above Tuesday's record and dropped 20 percent from here, then it would be a tie. In early trading Tuesday, the S&P 500 was sitting just below that record and flat for the day.) Belpointe chief strategist David Nelson warned investors to ignore the skeptics who may use the milestone as a reason to get out of the U.S. stock market. "The data still points to U.S. equity markets as being the better asset class. Look around the world. We're the best game in town," he wrote in an email Monday. "If someone calls telling you to take money out of the U.S. and put it in emerging markets because they are cheap, HANG UP. Dead money for 12 years. Cheap for a reason." One Wall Street veteran explained the rally's length is unimportant, and what matters for the market is the economy's strong growth. "Bull markets don't die of old age. What kills them is recessions," Yardeni Research's Ed Yardeni said Monday on his website. "The earnings picture has been so bright. … I think we're going to have a long expansion. I think the bull market continues." Yardeni reaffirmed his 3,100 year-end target for the S&P 500, representing 9 percent upside to Monday's close. In similar fashion, J.P. Morgan Chase CEO Jamie Dimon agreed the state of the economy is the main driver for the market. He said earlier this month that the current bull market could "actually go for two or three more years." Trump effect<doc-sep>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. 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. 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. 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’s close at 2,861 points was 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. Stock markets have also benefited since the crisis 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 (£2.3tn), 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.” Sign up to the daily Business Today email 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. 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.<doc-sep>
At the close of trading in New York today, the stock market will make an impressive milestone. It will set the record for the longest bull market in history. A bull market generally begins when the market rises 20% from the low set at the end of a bear market, which itself is measured by a 20% fall from a previous peak. (There are other ways to measure all this, and other records that can be argued over.) The last low set by the benchmark S&P 500 index was on March 9, 2009. It’s been 3,453 days of fairly steady growth since then, with the S&P 500 climbing by more than 320% over that period. The previous record bull run was set between Oct. 1990 and March 2000. This is another sign that the current economic recovery is getting long in the tooth. And though it’s said recoveries don’t die of old age, many people are convinced the end of the cycle is rapidly approaching. A long run of loose central bank policies following the financial crisis has helped stretch out this bull market, making stocks more attractive than low-yielding bonds and giving companies leeway to borrow freely. Recently, corporate tax cuts have added another boost to corporate balance sheets. The single biggest contributor to the current bull run has been Apple, which recently hit its own milestone of becoming the first US public company valued at more than $1 trillion. Meanwhile, the company whose share price gained the most during this bull market has been Abiomed, which makes medical implant devices. Its stock has climbed a heady 6,900% since March 2009. This bull run has struggled to survive at times. In August 2015, global stocks suffered a rout that threatened to end the bull market. A selloff that started in Chinese stocks ultimately wiped off more than $5 trillion in global stock value in just a few days. In February of this year, the S&P 500 dropped by more than 10% and stocks had their most volatile quarter since 2011. Given these setbacks, this bull run hasn’t been the strongest in history, even if it is now the longest. It has recorded the third-largest total return of bull markets going back to the 1930s, according to data from S&P Dow Jones Indices. On an annualized basis, the returns have been particularly weak, at only 16.5% per year, making it 10th out of 13 bull markets. By comparison, the 1990-2000 market produced an annualized return of 19%. The strongest on that measure ran from June 1932 to March 1937, which returned just under 36% on an annual basis. What does today’s record-setting milestone mean to most people? Probably not a lot. Research published earlier this year by an economist at New York University found that more than 80% of all stocks owned by Americans are held by the wealthiest 10% of households. Almost half of US households have absolutely nothing invested in stocks, not even through their retirement savings.