The bear market of the S&P is officially over, but many economic headwinds still persist.
The S&P has entered a new bull market. The index has officially risen 20% since its lows in October of 2022. The bear market started in January of 2022 when the S&P set a record high and ended on October 12 when it bottomed out 25.4% lower.
Bear Market Over
The markets began to fall as worries about inflation mounted. The Feds response to economic conditions led to a swift rise in interest rates. This added to the pain as certain sectors of the economy became stressed. The banking industry was particularly hard hit, as we saw the folding of some major banks in recent months.
This Bear Market was milder than most, lasting 9 months, The average since 1950 has lasted 13 months and has seen drops in market prices by over 34%.
The thinking is that the mild nature of this bear market can be attributed to the avoidance of a recession. A stubbornly strong labor market has kept consumers spending and has thus far kept the economy growing.
Not so Fast
Is this bear market really over? Technically it is, at least by the official definition. But we are far from out of the woods. The Fed may not be done raising rates, and it is expected that other sectors of the economy could start to crack like the banking industry recently has.
Many economists are saying that we are at the tail end of a relief rally and that we could soon retest market lows. Only a handful of companies have been responsible for recent market runs, most of them concentrated in the tech sector.
So, while the bear market may officially have ended, there are still a lot of market headwinds that could keep the indexes range bound for some time.
If we are in fact entered a new bull market, then they tend to stay around for a while. The average since 1932 is 5 years with average returns of 177%.
Conclusion
The S&P has entered a new bull market. As of the market’s close today the index officially rose over 20% from the lows of October 2022. Many economic headwinds still exist, and the indexes may have trouble making additional gains, but coming out of a bear market is at least some positive news.
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Writer and Investor. Based in the Pittsburgh, PA area, Brian holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.