One year ago this week, the stock market bottomed out. But since then investors have ridden a giant wave of vaccine progress, epic fiscal stimulus, and unprecedented support from the Federal Reserve as trillions of dollars were spent to thwart a pandemic Depression.
The S&P 500 has surged a stunning 76.1% from that Covid crash last spring — and history shows the hotter a bull market starts, the longer it typically lasts.
On Wednesday, CFRA Research’s chief investment strategist Sam Stovall wrote in a note; There are no guarantees, but “an above-average first-year gain has typically translated into a longer-duration bull market, whereas tepid first-year gains usually led to below-average durations.”And this first-year bull gain is well above average.
In fact, it’s more than double the average 37.5% for previous bull markets and the highest gain since 1945, according to Stovall. It’s also a good clip above the 2009 bull’s 68.6% first-year jump.
So this runup could last quite a while. Never before has the adage “Wall Street is not Main Street” been more true. Sure, a Depression was averted, but the US is still in the midst of the pandemic. And the suffering has been unprecedented, even as the Dow set new record highs dozens of times and has topped 33,000, and the Nasdaq, though under pressure recently, is still up almost 75% from its 2020 low as well.
