It's a Confirmed Bull Market, Which Stocks Will Lead the Way?
Zacks Investment Research | Jul 22, 2020 04:32AM ET
Stocks have been on a tear posting record gains since their pandemic low close in late March.
Since then the Dow has surged by more than 48%, the S&P by 45%, and the Nasdaq by 56% (which made another new all-time high earlier this week).
That’s twice what’s needed for a bear market to officially end and a new bull market to begin.
And the best part is that it looks like there’s a lot more upside to go.
History has shown that after bear markets end, the bull market rallies that follow are nothing short of spectacular.
Following the previous bear market of 2007-2009 (during the housing/financial crisis, aka the Great Recession), the market (Dow) gained 63.4% in year 1; 100.6% by year 3; 153.6% by year 5; and more than 357% during the entire 11+ year bull market.
But it’s worth noting that our economy and financial system back then were on pretty shaky ground going into it and that’s what led to the bear market pullback
A starkly different situation leading up to this one. In fact, the economy was considered the strongest economy of our lifetime with 50-year low unemployment, 20-year high in household income, and near record high in consumer confidence.
Instead, it was a virus outbreak that caused the pullback. But since the U.S. was in such great shape prior to this, that’s why we’re seeing it bounce back so strongly and so quickly now.
Then add in the nearly $10 trillion in monetary and fiscal stimulus (and likely more to come), not to mention near zero interest rates for the foreseeable future, and it looks like stocks are poised to soar even more.
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