The Spring of this year saw the decade-long mark of the longest running bull market in U.S. history. On March 9, the S & P 500 celebrated the 10-year anniversary since the index hit a low in 2009. By October 9, the index had hit 2,919.40, a 330 percent increase over 10 years.
By November 15, the Dow had crossed a new milestone by passing the 28000 mark. That trend continued with equities closing at all-time highs for two consecutive days on November 25 and 26.
Good corporate earnings and some favorable actions by the Fed and good economic numbers have been enough to spur on the long rally that has seen record after record broken.
Also, there have been signs of hope in U.S.- China trade negotiations. This may be tempered more recently by a bill passed in the Congress supporting the proDemocracy protestors in Hong Kong and condemning the actions of the Communist Chinese government.
The Hong Kong Human Rights and Democracy Act is a bill that imposes sanctions on those responsible for human rights violations. The bill first passed the Senate and then the House and the bill is awaiting signing by the president.
Despite this, just a hint that a deal had been reached was enough to continue the rally with a remark from Chinese officials that their negotiators had reached consensus on some important points.
The Long Rally
Investors have seen a number of pull-backs and a continuance of volatility, but the gradual climb of the S & P 500 index has been steady and impressive. On January 2 of this year, the index stood at 2,510.03. Tuesday, November 26 saw a close at 3,140.52.
The S & P is up more than 25 percent year-to-date and the Dow Industrials is up more than 20 percent this year. The Russell 2000 Index is also up more than 20 percent since the beginning of the year.
During just the brief time period from late October through late November, the Dow and S & P 500 were both up more than 4 percent and the Nasdaq was ahead more than 5 percent.
Ratification of the USMCA is another inducement that provides some hope for the market and would be a boost to the economy and expected to create jobs.
The direction of the thinking of the Federal Reserve is also more welcome to Wall Street at this point and any rate cuts would be welcome news.
The Fed saw modest expansion in the economy in October through mid-November, with their “Beige Book” prediction anticipating some continued growth into the new year.
While there have been experts who have suggested that the long rally has run its course, and that was very evident this last December, they have been proven wrong. The market has been unscathed by many geopolitical events and Fed actions and has rebounded time after time.
During the Fall, and later portion of the year, the market has been mostly up in previous years. If that remains the case this year, 2019 will be another banner year for equities after a rally that has stunned many of the pundits.