It’s been a year since the pandemic blinded the United States for the first time, turning many jobs, ways of schooling, and ways of socializing into stay-at-home events.
But it was only about 11 months ago that the new bullish market for the S&P 500 began.
This is one of the two main reasons why Truist Wealth analysts think of a sustained rise in the S&P 500 SPX index,
he still has room to run.
This chart shows that the current evolution of the S&P 500 bullish market may be too short and too limited, in terms of price gains, to end it soon, at least if the last six decades of performance during a pandemic are applied. .
The current S&P 500 bullish market is too short, scarce in the returns department.
Truista wealth
The bars show that the average bullish market S&P 500 since 1957, when the benchmark was first introduced, resulted in price gains of 179% and that good times lasted an average of 5.8 years, which compares to the current return of 76% in less than a year.
US stocks began to decline in corrective territory about twelve months ago, after the coronavirus pandemic began to cut off travel and trade worldwide, a rocky period that was followed by major income benchmarks. American variable that cut new lows in late March.
But after quickly recovering its losses in 2020, this year’s stocks have continued to hit a record high, thanks in part to the trillion-dollar fiscal and monetary stimulus that has been spreading through of the economy, according to policymakers. is committed to households affected by the crisis and to maintaining confidence and liquidity on Wall Street.
More recently, these same forces have also raised concerns that good times, after COVID, were already fully included in stock prices and other financial assets, and that high-flying stocks and the riskiest parts of the market. debt market could face problems if runaway inflation is taken advantage of or the costs of loans for businesses and consumers are too high.
The S&P 500, Dow Jones Industrial Average DJIA,
the Nasdaq Composite Index COMP,
were affected by volatile patches last week as the TMUBMUSD10Y Treasury at 10 years,
the yield rose, and again on Wednesday, when benchmark bond yields were observed 1% higher than a year earlier, or close to 1.47%.
The three major stock indexes closed lower on Wednesday for the second day in a row, as bond yields rose and technology stocks came back under selling pressure.
Related: Cathie Wood’s ARK ETF steering wheel has just entered a bear market, a sign of the times?
So how does the current rise of a low-rate environment compare to the 1950s?
Truist analysts also have a chart showing that the 10-year S&P 500 and 10-year Treasury yields rose sharply during the 1950s.
Stocks, bond yields increase together.
Truista
“While there are many differences between the 1950s and the present, there were some similarities, such as very high U.S. debt levels as a result of the war, an activist Fed, and a postwar boom in the economy, ”Keith Lerner, chief market strategist at Truist, wrote in a note Wednesday. “Interest rates went from 1.5% at the beginning of the decade to almost 5% at the end. Over the decade, despite two recessions, the S&P 500 rose 257% in price and 487% in total return. “
This time, Federal Reserve officials have also repeatedly vowed to avoid tightening monetary conditions, keeping policy rates close to zero and its $ 120 billion a-month bond purchase program open until the economy fully recover from the pandemic.
And investors without yield-hungry bonds have welcomed the rush to borrow among top-rated companies this week, amid higher cost prospects.
See: Companies compete to go into debt after last week’s rise in extreme rates comes to a standstill