Published: Fri, August 24, 2018
Money | By Hannah Jacobs

Wall Street ready to mark ‘longest bull run in history’

Wall Street ready to mark ‘longest bull run in history’

Bolstered by quarterly earnings reports and a rise in stock buybacks, the S&P 500 has gained over 2 percent in the past month.

The current bull market began amid the emergency steps taken by the Federal Reserve, which set ultra-low interest rates and sought to spur investment further with billions of dollars in bond purchases in a program known as "quantitative easing".

S&P 500 earnings grew 23% in the first quarter, the strongest pace in seven years.

With Tuesday's gains, the market logged a 3,452-day winning streak, leaving the S&P index 323 percent higher since it began its steady rise from the ruins of the financial crisis.

"I agree that valuations in general have become stretched; however, corporate earnings have been strong, and I believe USA stocks are likely to continue to outperform in the shorter term given the strength of the U.S. economy and the perceived safety of United States stocks in the midst of trade wars".

The S&P 500 is outperforming other major indexes globally for the year since May, and has not looked back.

Global equity markets have climbed steadily as the strong economy and robust earnings growth favor stocks in a relatively benign environment.

Medtronic Plc, PulteGroup inc and Discovery Inc all shot up almost 5% lifting the S&P 500.

"For the time being, this has caused investors to shrug off the threat of trade wars, ' says Sargen".

For now, the main impact of protectionism is being felt overseas, in places like Europe, China and emerging markets.

Investors eyeing this Wednesday as the record-setting date call that decline a bear market, which interrupted the 1987-2000 bull run, while others do not. Still, it's premature to declare the USA won't feel the effect, as the bull run a year ago was fueled by strong global growth, Sargen warns.

The small-cap Russell 2000 index, which is more immune to the global tariff disputes than its large-cap peers, jumped 1.36 percent to a record high.

"Stock buybacks have really juiced returns of those companies with the biggest buyback programs, ' says Paul Schatz, president of Heritage Capital in Woodbridge, Connecticut.

The S&P index recorded 41 new 52-week highs and no new lows, while the Nasdaq recorded 145 new highs and 25 new lows.

Cox recommends investors wean themselves off high fliers, such as tech stocks and small-company shares, and move into parts of the market that have not gone up as much, such as companies that sell everyday staples to consumers.

"Next to these headlines, trade news fell completely under the radar", Citi analysts said, noting "concern that something could come out linked to Trump or other of his associates" and that Cohen's guilty plea sparked a late-session bid in USA treasuries.

Schatz says going all in now doesn't make financial sense.

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