The Current Bull Market: Is There Still Room to Grow?

Historical records of bull markets show that stocks are likely to continue rising from here, according to Carson Group. Some other investors wonder if this bull market has enough momentum to carry on.

The current bull market turns two years old this week (the S&P 500 hit its low on October 12, 2022). However, rising tensions in the Middle East and fears of increasing yields have weighed on stocks so far this October. The index is in the red for the month, despite a good rise on Tuesday.

But if history is a guide, the fear that the current recovery could turn into a full-blown bear market may be unfounded. Data from Carson Group analyzing S&P 500 data shows that the current bull market is still only the second youngest of the 12 observed since 1950.

“While many people may think this bull market has gone too far and is already old, this is not the case at all. If you look back in history, bull markets typically last more than five years on average, so the current one, which is two years old, is actually young,” said Ryan Detrick, chief market strategist at Carson Group.

Kevin Gordon, senior investment strategist at Charles Schwab, agreed with Detrick’s assessment and added that strong revenue growth—besides profit growth—is the main factor driving the market upward at the moment. However, Gordon noted that, on average, bull markets tend to last longer after a recession, which the current one has not experienced.

“If you use only this as your benchmark, then history would align with the view that the current recovery could be a bit shorter-lived,” he told CNBC.

Other investors are even less optimistic, especially since this year is an election year and it still seems to be a matter of chance as to which candidate can win the U.S. presidency. Komal Sri-Kumar, president of Sri-Kumar Global Strategies, believes that the bull market could last another three to six months at most.

“Whoever takes office will face a huge problem regarding the overall national debt, and none of the candidates have a solution for it,” he told CNBC in an interview. “I expect the bond market to be more tolerant of this situation until the elections, but once the new president takes office, bonds will start to question whether the deficit is sustainable again. I expect yields on 10- and 30-year bonds to rise significantly, which will be a headwind for stocks.”