Wall Street's bull market reaches nine years with more to come

Wall Street’s bull market has turned nine years old, the second longest of any rally. It has been 2266 trading days since stocks hit their low on March 9, 2009, during the global financial crisis.

Since then, corporate profits have regained their footing, while the unemployment rate has fallen to 17-year lows and the pace of global economic growth has accelerated.

The S&P 500 has more than quadrupled over that period, the Dow Jones Industrial Average is up 280% and the Nasdaq Composite has surged 486%.

Investors are still largely positive that earnings will continue to rise, putting a floor under stocks despite recent volatility and inflation fears.

“It’s going to be a hard slog, certainly compared to the previous nine years,” says John Velis, a macro strategist at State Street Global Markets.

Earnings remain strong
Corporate earnings look strong enough to continue supporting further stock gains, even as the Federal Reserve pares its bondholdings and raises short-term interest rates from near historic lows.

On Friday, US stocks extended their gains for the week, after an upbeat February jobs report eased investors’ concerns that inflation is accelerating too quickly.

“It’s a good report for stocks because it is keeping the Fed at a more measured pace in 2018 for raising rates,” says Matthew Miskin, a strategist with John Hancock Investments. “But we’re not out of the woods yet,”

He expects the increased level of volatility to persist while the market grapples with other issues, including how the European Union and other countries decide to respond to the Trump administration’s tariffs on steel and aluminium imports.

The Dow Jones Industrial Average jumped 440.53 points, or 1.8%, to 25335.74, the S&P 500 added 47.60 points, or 1.7%, to 2786.57 and the Nasdaq Composite rose 132.86 points, or 1.8%, to 7560.81.

The gains helped the Dow add 3.3% for the week, while the S&P 500 climbed 3.5% and the Nasdaq Composite rose 4.2%.

Wage growth slows
Data from the Labor Department showed that wage growth slowed in February, while the annual wage gain in January – which initially came in stronger than expected – was revised down.

JP Morgan says while the jobs report should be enough to keep Fed rate hikes at three this year rather than four, more data are due before the next open market committee meeting on March 20-21.

This data include February CPI figures on Tuesday (Wednesday, NZ time) and retail sales the day after.

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