Ralph Orlowski | Bloomberg | Getty Images
The S&P 500 closed a new record on Tuesday, a performance that officially puts an end to Wall Street’s shortest bear market and confirms the comeback rally as a new bull market.
The broad market index completed the session at 3,389.78, above its previous record close of 3,386.15 that it hit on February 19th.
A bear market on Wall Street is defined as a 20% decline in the S&P 500 from close to close. It is only officially over when the market returns to a new closing height.
A bull market is a rally larger than 20%, but only becomes official if the S&P 500 closes a record high, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
While defining a new bull brand can be easy enough, Silverblatt explained that dating her can be confusing at times. That’s because the lifespan of a bull market, once explained, includes the recovery time of the S&P 500’s bottom market.
The new bull market, for example, was confirmed at the end of trading on Tuesday given the new record of the S&P 500. But it is actually as old as the spring base of the market, which happened on March 23, then. ‘ t the S&P 500 dropped to a low of 2,237.40.
As the S&P 500 has not made any new lows since that date, market strategists consider that the bull market began at the low of March 23, when the market’s recovery period began.
This means that the bottom of March 23 was the official end of the bear market and the beginning of the bull market. The bear market, which started on Feb. 19, lasted only a month and cut 33.9% of the S&P 500.
This also means that the new bull market is already almost 5 months old (again, since March 23) with a gain of 51.5%.
The comeback has mystified many investors, who did not dream that the benchmark index in 2020 could even come close to highs after its dramatic Covid-induced sell-off back in March. But the index has, at least, complained its way back from a bear market.
The S&P 500 climbed 20% in the second quarter, one of its best on record, as Big Tech stocks like Netflix and Amazon outperformed Americans in quarantine at home.
More recently, however, economically sensitive stocks such as companies, energy and financials have generated gains as investors bet on a possible vaccine and return to a semi-normal lifestyle.
The index is up 9.3% in the third quarter, which started on July 1, and up 4.9% for 2020.
Sure, some on Wall Street have varying views of what defines a bull or bear brand, but these are the most accepted definitions.
sign up to CNBC PRO for exclusive insight and analysis, and programming for live workdays from around the world.
.
