No matador in sight as bull market in U.S. stocks turns eight

Thu Mar 9, 2017 7:20am EST
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By Chuck Mikolajczak and Rodrigo Campos

NEW YORK (Reuters) - The run of gains on Wall Street turns 8 years old on Thursday and, despite its advanced age, is expected to rage on, with perhaps a few hiccups, based on a combination of stronger company earnings, lower taxes and a corporate-friendly administration in Washington.

Strategists, however, warn that a correction of as much as 10 percent should be expected as the market is richly valued. The bull case for equities relies on analysts seeing little chance of recession in the short term.

"Just because the (bull) market has hit a birthday, or is among the longest ever, doesn’t mean that it will 'die' of old age," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"Markets don’t really pay attention to the calendar or the candles on the cake."

The S&P 500 index .SPX has rallied 250 percent since hitting a closing low of 676.53 on March 9, 2009. The gains since, uninterrupted by a decline of 20 percent or more, rank this bull market as the second longest ever.

The current run is nearly three years older than the average bull and more than a year shorter than the longest one: the rally from Oct. 11, 1990 to March 24, 2000.

The S&P continued to rise through a year-long decline in corporate earnings through most of 2016, supported in part by historically low interest rates which made stocks comparatively cheaper and more rewarding than U.S. Treasuries.

The index has risen nearly 6 percent in 2017, closing on Wednesday at 2,362.98. Analysts remain undeterred in their belief that more gains are coming as the economy and corporate earnings growth improve.   Continued...

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 6, 2017. REUTERS/Brendan McDermid