U.S. stocks were in record territory on Wednesday, one day after the S&P 500 closed at an all-time high for the first time since February.
On Tuesday, the index closed at 3,389.78, surpassing the Feb. 19 high of 3,386.15. Tuesday’s intraday high of 3,395.06 was also a new record, surpassing Feb. 19’s 3,393.52 peak. On Wednesday, the index was higher still, with the index briefly reaching 3,399.54 on an intraday basis, before closing down modestly on the day.
ETFs that track the S&P 500, like the SPDR S&P 500 ETF Trust (SPY), are up around 5.9% year to date (including dividends), and up a whopping 51.9% from the March 23 low.
Fastest Recovery Ever
The 126 days it took for the S&P 500 to recover to its prior peak is the fastest rebound ever from a bear market. The move mirrors the index’s initial descent into bear market territory—considered a drop of at least 20% from the highs—which took a mere 16 sessions, the most rapid drop of that magnitude on record.
The S&P 500 reached bottom 23 days after peaking, making the COVID-19 bear market decline also the shortest on record.
Unprecedented relief measures from monetary and fiscal authorities in the U.S. have supported stocks, offsetting what may end up being a brief, but severe, recession. A relentless rally in large technology stocks in particular, and growth stocks in general, has also benefited large cap indices like the S&P 500.
Smaller stocks haven’t fared as well, though they too are well off their lows. The iShares Russell 2000 ETF (IWM), which tracks small cap U.S. stocks, is still down 7.7% from its all-time highs.
Bull Market Beginning?
Some investors consider the point at which the S&P 500 reaches a new high after a bear market the start of a new bull market.
Others consider the lows of the bear market (which can only be seen in hindsight) as the starting point of any bull market. If that’s the case, then this bull market has been chugging along on for nearly five months.
In either case, these labels do not guarantee anything about the future trajectory of stocks. For example, in May 2007, the S&P 500 topped 1,530, hitting a new high for the first time since the dot-com bubble peak of seven years earlier.
Rather than mark the start of big bull market, the S&P 500 was cut in half over the next year and a half due to the global financial crisis. History is littered with examples like these.
That is not to understate how impressive this year’s comeback in U.S. stocks has been. The rebound has been monumental, and could very well mark the start of a bigger uptrend. But investors will only know for certain in hindsight.