Second anniversary of the US stock bull market: the S&P 500 rose more than 60% and is expected to continue for another 22 months

The Zhitong Finance App learned that Wall Street ushered in the second anniversary of the current bull market, and the S&P 500 index rebounded more than 60% from a bearish low. Although the COVID-19 pandemic and the intensification of the Russian-Ukrainian conflict in early 2022 had a major impact on the global economy, causing inflation to soar, the S&P index has risen 62.6% to close at a record high of 5815.03 points since October 12, 2022, when it hit the bottom of 3577.03 points. The main drivers of this bull market include a surge in artificial intelligence (AI) trading, strong performance by big tech stocks, and market optimism that the Federal Reserve may achieve a soft landing in the economy.

J.P. Morgan recently said that we have just passed half of the 46-month mid-term bull market. If this trend continues, investors can expect another 22-month period of growth. In the past two years, despite a sharp correction in the market, the benchmark index has recovered and reached dozens of record highs, setting a new record almost every five trading days in 2024.

Bespoke Investment Trust pointed out on social media that the S&P 500 index has changed at a rate of 60% over the past two years, ranking 95th in history.

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One of the questions now is: How long will this bull market last? Indications suggest that the market still seems to have enough support, especially after the Federal Reserve cut interest rates for the first time in four years and the US economic growth expectations were raised.

According to Dow Jones data, the S&P 500 index will grow at least 20% for the second year in a row, unless it plummets by 40% before January, which will be the first time since 1998. Although money market fund assets crossed the $6.5 trillion mark in October, the stock market continued to rise. Senior strategist Ed Yardeni (Ed Yardeni) said that if the Federal Reserve continues to lower interest rates, stock prices may soar further.

However, the hurricane in Florida, the intensification of the Middle East conflict, and the upcoming presidential election all present risks for investors. Furthermore, the expected price-earnings ratio of the S&P 500 index is already close to the “overvalued” range, jumping from 15 in October 2022 to 21.6, close to 25.5 in 1999.

Still, the stock market doesn't seem so overvalued anymore. Wall Street believes that a broader market is a healthier market. In the third quarter, the performance of the equal-weighted S&P 500 index surpassed the market capitalization-weighted index, indicating that the influence of the “Big Seven US Stock Companies” on the index was weakening. Compared to a year ago, 85% of companies in the S&P 500 are now profitable.

Ryan Detrick, chief market strategist at Carson Group, said that although it is impossible to accurately predict how long this bull market will last, there is no reason to expect a recession or the end of the bull market for at least the next 6 to 9 months. He added that although the 62.6% increase in the past two years may have come as a surprise to many, the average duration of the bull market is more than five years, which means that the current bull market may still have more room to grow.

In terms of individual stocks, apart from Tesla, the seven major tech giants played a key role in this bull market, and their stock prices have generally risen by about 60% since October 12, 2022.

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