Are We in a Bull Market Yet? | Morgan Stanley (2024)

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Are We in a Bull Market Yet? | Morgan Stanley? ›

Key Takeaways. Potential economic obstacles in 2024 could delay the start of a sustained bull market, but investors can still find opportunities. Consider staying cautious on U.S. stocks while shifting to bonds for potential income and capital gains.

With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.

The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official. The onset of a new bull market has historically been a very reliable stock market indicator.

When did the bull market start? The current bull market started in October 2022, when the S&P 500 reached its most recent low. Since then, the index has swelled about 35 percent.

Morgan Stanley economists anticipate U.S. growth of 2.6% in 2024 and 2.1% in 2025, compared with 2.5% in 2023. Year-over-year growth is likely to moderate toward the end of 2024 with fourth-quarter GDP growth of 2.1%, compared with 3.1% in the fourth quarter of 2023.

Stocks are up 8.8% in 2024 through May 7, as measured by the S&P 500, but markets have cooled and the large-cap index is down 1.3% in the second quarter. Some investors are inching toward the sidelines amid worrisome economic news: slowing economic growth, a softening labor market and rising core inflation.

Because prices of securities rise and fall essentially continuously during trading, the term "bull market" is typically reserved for extended periods in which a large portion of security prices are rising. Bull markets tend to last for months or even years.

The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.

Since 1957, the S&P 500's average annual rate of return has been approximately 10.5% (through March 2023) and around 6.6% after adjusting for inflation.

How do you know if a bull market is coming? ›

There's good news when it comes to the average length of market downturns and upswings: Bull markets, on average, last far longer than bear markets. According to data from investment group Bespoke, the average S&P 500 bull market since 1929 has lasted 1,011 days -- or just under three years.

Risks of investing during a bull market

Overvaluation: During bull markets, asset prices can become overvalued due to excessive optimism and speculation. This can lead to a correction or market downturn, when prices return to more reasonable levels, which can lead to investors to experience significant losses.

Vanguard's active fixed income team believes emerging markets (EM) bonds could outperform much of the rest of the fixed income market in 2024 because of the likelihood of declining global interest rates, the current yield premium over U.S. investment-grade bonds, and a longer duration profile than U.S. high yield.

The updated Dow Jones price prediction for the next 5 years is for the index to trade around 45,000 points. Long Forecast predicts Dow Jones to trade above 40,000 points in the second half of 2024 and and advance up to 44,000 points by the end of the year. This is the most bullish Dow Jones forecast for 2024.

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

The bull market keeps powering ahead, even as interest rates appear poised to remain higher for longer than investors initially expected. The Morningstar US Market Index is up 10% so far this year, and roughly 25% over the past 12 months.

Since the launch of bitcoin exchange-traded funds earlier this year, bitcoin has regained and even surpassed the all-time high it set during the heady days of the 2021 bull market. But for weeks and weeks and weeks it seems like, at best, the biggest crypto has been trading sideways.

How long the average bull market lasts. As much as investors would like the answer to this question to be "forever," bull markets tend to run for just under four years. The average bull market duration, since 1932, is 3.8 years, according to market research firm InvesTech Research.