It's official. The bear market is behind us.
The S&P 500 finally hit a new record for the first time since 2022. And then notched multiple higher highs in the days that followed.1
That means it passed the final bar to formalize the bull market in stocks that started after the October 2022 market low.2
What’s a bull market?
Though there’s no official designation, “bull market” is a handy nickname for a period of generally rising markets.
Bull markets get called when a) markets rise at least 20% above the most recent market bottom and b) reach and surpass the previous market high.
It can get a bit confusing since sometimes we're in a bull market but don't "officially" call it until later.
Does this mean all stocks are rising?
No. An index like the S&P 500 represents a portion of the market and is useful for tracking trends over time.
The performance of individual stocks is affected by the earnings and expectations of the underlying companies and other factors that may not apply to the overall market.
So, what happens next?
If we look at the history of bull markets, we can expect markets to continue to rise.
The last two bull markets (from 2009-2020 and 2020-2022) lasted 132 months and 21 months, respectively.3
On the other hand, there are reasons to be cautious.
For one, the past doesn't predict the future.
Pullbacks happen regularly and it's common to see a drop after pushing new highs as investors take profits.
And we know investor optimism can flip to negativity quickly when fresh headlines arrive.
The year has kicked off with lingering uncertainties about inflation, interest rates, and the economy that could drag on market performance.4
Here's a chart that shows intra-year dips in the S&P 500 alongside annual performance.
(Take a look at the red circles to see the market drops each year.)
The big takeaway? In 16 of the last 24 years, markets have dropped at least 10%.5
Even in years with powerful performance, markets typically experience a pullback or two.
For right now, we have some economic news to celebrate.
The economy grew much faster than expected at the end of 2023.
The U.S. economy grew 3.3% (annualized) in the fourth quarter—much higher than the 2% expected—though still slowing from 4.9% growth in Q3.6
Consumer spending was strong, indicating Americans are feeling optimistic enough to keep shopping.
There’s also encouraging data on inflation.
The Personal Consumption Expenditures (PCE) index shows inflation rose just 2.7% in 2023 overall, down from 5.9% a year ago. That’s a significant decrease in overall inflation.6
Taken together, that means the economy is still growing while inflation continues to moderate, which is exactly what economists hoped would happen.
Bottom line: we're seeing positive developments but remaining cautious. We’re keeping an eye on markets and will be in touch with updates as needed.
Questions? Hit “reply” and let us know. We'll set up a time to chat.
Your Eagle Wealth Team
Easy Houseplants That Anyone Can Grow
Houseplants can bring a bit of joy and nature to every corner of your home.
Why are indoor plants so great? Well, not only do they spruce up your space, but they can also improve your mood, help you relax, and even clean the air you breathe. 7
If you don’t consider yourself someone with a green thumb, this list of low-maintenance houseplants can help get you started. Perfect for those of us who have killed a few too many plants in the past!
Here are some of the easiest houseplants that anyone can grow:
- Sansevieria a.k.a. snake plant
- ZZ plant
- Spider plant
- Heart-leafed philodendron
- Ponytail palm
Most of these plants are easy to take care of because they are tolerant of watering and light conditions. Some are fine in indirect or low-light situations, while some prefer a sunny corner. Research each one to see which ones fit into your home.
Tip adapted from Bloomscape
The Week on Wall Street
Stocks continued their upward climb last week as excitement around big tech continued; positive economic reports stoked investors’ belief that the Federal Reserve has pulled off a soft landing.
Stocks Power Ahead
Big tech was back last week, pushing the Dow and the S&P 500 to new highs early in the week as markets resumed the late Q4 rally.
The so-called “Magnificent Seven” stocks—comprising 28% of the S&P 500 Index—resumed their pole position at the head of the pack as investors maintained their artificial intelligence (AI)-related bullishness and rewarded widespread cost-cutting at many tech giants. While the rally fizzled on Friday, the week’s gains were slow but steady.8,9,10
The big economic news last week was better-than-expected economic growth and inflation news. Real Gross Domestic Product grew at a 3.3% annualized clip in Q4 2023, ahead of Wall Street consensus expectations of 2%.
The Personal Consumption Expenditures (PCE) Index, one of the Fed’s most favored inflation gauges, showed core inflation (excluding food and energy) cooled in December, with an annualized rate of 2.9%, beating consensus expectations. Core inflation was 3.2% on an annualized basis—its lowest level since March 2021. While the inflation update didn’t move markets much, it helped validate investors’ optimism that Fed policy has maintained economic growth while bringing inflation down.11
Earnings Season Feeds FOMO
The market digested Q4 earnings news from some of the largest companies, with enthusiasm feeling like FOMO. The “fear of missing out” drove much investor sentiment and seemed to build market momentum.
While the enthusiasm for AI continues to be one driver of technology stock prices, the spotlight last week was on layoffs. Over 23,000 workers at 85 tech companies have lost their jobs this month. The market appears to be rewarding the cost-cutting measures, with many tech giants repositioning themselves with AI in mind, and some analysts inferring that this emphasis on efficiency may encourage investors.12,13
Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance
Chart source: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-the-markets/mi-guide-to-the-markets-us.pdf
8. The Wall Street Journal, January 22, 2024
9. CNBC.com, January 22, 2024
10. The Wall Street Journal, January 25, 2024
11. CNBC.com, January 25, 2024
12. Slickcharts.com, January 26, 2024
13. CNBC.com, January 26, 2024
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