The bull market on Wall Street that started after the 2008 financial crisis is now not only the longest in history, but the largest. CNBC reports that as of last week, the S&P 500 index was up 472% since bottoming out in March 2009. That surpasses the 454% rise during the bull market of the 1950s and a 391% increase during the 1990s bull run.
There are several key factors playing into a stock market boom lasting this long and reaching this level of growth. The biggest one may be Federal Reserve policy, which has remained relatively market-friendly over the past decade. The Fed has even reduced interest rates multiple times this year after there were warning signs of a slowing global economy. "One of the biggest reasons for the market run-up since the 2008 financial crisis has been Central Bank liquidity," says Michael Smith, president of STA Wealth Management. "As long as (Fed) stimulus remains intact, we will continue to see this market headed in an upward direction."
Another major factor in the ongoing boom is consumer confidence and spending, which has remained strong despite slowdowns in some other sectors during the past year. "If you look at GDP, 30 percent of it is in a recession, and that is due to the manufacturing and services sectors," says Smith. "But when you look at what's keeping it together, 70 percent (of the market) relies on the consumer."
The biggest issue looming over the stock market continues to be the ongoing trade dispute with China. The nations have signaled what they call a phase one agreement to be signed soon, but Smith predicts this issue will become a new normal that drags on for years. "This is not going to be something that's done in phase one...I keep reminding people this trade war will be lasting probably another ten years," he says. "So when the trade war is running hot, we can expect to see volatility in the markets...and then when things run cold we can expect to see things return back to normal."