It’s been seven years since one of the stock market’s best-ever runs began, but the anniversary is passing without a party.
This bull market is the third-longest in history, and investors in mutual funds that track the broad U.S. market have more than tripled their money since a 6 percent jump seven years ago Thursday marked the start of the run.
Investors still don’t believe in it. This bull market has been mistrusted and unloved from the start, even though it has managed to stagger higher amid a government shutdown, a debt crisis in Europe that nearly tore apart the European Union and a growth slowdown in China, the world’s economic engine.
At times, even as the market stayed strong, regular investors were pulling money out of stocks instead of investing more as in past bull markets. Now, worries are high that the market has already topped out, and that a recession may be coming to knock the Standard & Poor’s 500 index down again.
Yes, stocks have been weak this year, and at one point last month the S&P 500 was down as much as 14 percent from its peak. But the index has so far managed to avoid a drop of 20 percent, the arbitrary line where market watchers say a bull market morphs into a bear market.
If the bull market does manage to stay alive, it would join only two others that made it into an eighth year. One of those, in the 1950s, petered out less than two months after passing the milestone. The other became the longest bull market, extending from late 1990 into 2000, according to S&P Capital IQ.
Why all the distrust? One word: recession. Investors are worried again that the economy, which has been growing only modestly, is about to go into reverse.
The worries now focus on the slowdown in China, which is the world’s second-largest economy and for years was its main engine of growth. Economies in Europe and elsewhere are also still growing only modestly, if at all, which pressures U.S. exporters.
And the Federal Reserve has almost no room to cut rates to stimulate the economy because rates are near a record low.
All that is against the backdrop of an economic recovery that, like the bull market, is also geriatric at nearly seven years old. The average economic expansion has lasted less than five years, going back to 1945, according to the National Bureau of Economic Research.
Investors may be uninspired, but the U.S. market has held up better than many other investments. Oil has lost nearly two-thirds of its value over the last two years. That’s dragged down the value of energy companies in the S&P 500 by 30 percent. China’s struggles have hurt stock markets across the developing world. Emerging-market stocks have lost 26 percent since a peak in April.
Many strategists on Wall Street say they expect the bull market for the S&P 500 to persevere, even if few expect huge gains. U.S. companies — and the stock market — have so far weathered a lot, strategists from Deutsche Bank wrote in a recent research report.
