NEW YORK — Stocks rose just enough Thursday for Wall Street to barrel into a new bull market as the S&P 500 keeps rallying off its low from last autumn.
The index rose 0.6% to carry it 20% above a bottom hit in October. That means Wall Street’s main measure of health has climbed out of a painful bear market, which saw it drop 25.4% over roughly nine months.
The Dow Jones Industrial Average added 168 points, or 0.5%. The Nasdaq composite, meanwhile, led the market with a 1% rise. That’s been the norm so far this bull run, as chip maker Nvidia and a handful of other big tech stocks have been responsible for the lion’s share of Wall Street’s gains.
Declaring the end of a bear market may seem arbitrary, but it offers a useful marker for investors. It also provides a reminder that investors able to hold on through downturns have nearly always made back all their losses in S&P 500 index funds eventually.
Even though it was driven by so many superlatives — the worst inflation in generations and the fastest hikes to interest rates in decades, for example— this most recent bear market lasted only about nine months. It stretched from Jan. 3, 2022, when the S&P 500 set a record, until Oct. 12, when it hit bottom. That’s shorter than the typical bear market, and it also resulted in a shallower loss than average.
“In hindsight, it might not look that bad, but it certainly feels bad in the moment,” said Brent Schutte, chief investment officer at Northwestern Mutual.
What made last year even more painful for investors is that both stocks and bonds lost money, he said, something that hasn’t happened in decades.
A good chunk of this bull market’s gains has been because the economy has refused to fall into a recession despite repeated predictions for one. It’s withstood the highest interest rates since 2007, three high-profile collapses of U.S. banks since March, another threat by the U.S. government of an economy-shaking default on its debt and a series of other challenges.
“Bottom line, the economy has been very resilient,” said Anthony Saglimbene, chief markets strategist at Ameriprise Financial.
“So much negativity was built into the market,” he said. “While it’s too early to know this for sure, stocks look like they’re doing what they normally do when all the negativity has been discounted into the stock market: They start moving higher in anticipation of better days ahead.”
Not only has the economy avoided a recession because of a remarkably solid job market and spending by consumers, hopes are also rising that the Fed may soon stop hiking interest rates.
The broad expectation among traders is that the Fed will hold rates steady next week, which would mark the first meeting where it hasn’t raised rates in more than a year. While it may hike rates one more time in July, the hope on Wall Street is that it won’t go beyond that. Inflation has been coming down from its peak last summer.
