US stocks are heading for a post-war record. The benchmark S&P 500 index, which sets the tone for the rest of the world, has been in a bull market since March 2009 or just over 3,400 days, as stockbroker AJ Bell points out. It is only 50 days short of the longest post-1945 bull run, October 1990 to March 2000. And having risen by 400%, it has easily eclipsed the 283% average rise of the ten previous post-war bull runs. It may well get through the next three months without slipping by 20% which would constitute a bear market and thus break the record. But then? "The list of headwinds is long and daunting," says Fidelity's Tom Stevenson in The Daily Telegraph.
A sea of troubles
Global stocks have suffered their worst first half since 2010, with the MSCI World Index of developed-country equities slipping by 1.3%; Europe and Japan finished down, while the S&P 500 ticked up. The global economy has lost some momentum, with European and Japanese data proving disappointing of late. This is partly due to the deteriorating outlook for global trade their economies and stockmarkets are more dependent on exports than America's. With Europe this week threatening to retaliate against probable US tariffs on European cars, "we slip, ever more irredeemably", towards an "outright" trade war, says Jeremy Warner in The Sunday Telegraph.
The rise in the oil price to a four-year high is another worry, as it gradually slows global consumption, while in the past few days investors have started to fret about China again. Its stocks have slipped into a bear market and the yuan has fallen sharply. These are "echoes of the plunge in the Chinese market in 2015" when the devalued yuan "threatened to trigger capital flight", says Stevenson. Europe's reappearing euro crisis, meanwhile, is doing nothing to alleviate the increasingly jittery mood in world markets.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Earnings growth is slowing
The economic and earnings backdrop isn't looking too hot, either. The artificial stimulus from the Trump administration's corporate tax cut will fade in the next year or so, with earnings-per-share growth dropping back from 21% in 2018 to 10% in 2019. Valuations are sky-high. And while the US Federal Reserve is only tightening monetary policy very gradually, the prospect of a sharp hike, destabilising markets and indebted corporations, looms over equities. The labour market keeps tightening, with the share of small businesses raising compensation at a 34-year high. "Accelerating pay rates are likely to provide a big surprise in the second half," David Levy of the Jerome Levy Forecasting Centre told Barron's keep a close eye on Friday's labour market data. On the other hand, companies could decide they can't pass on higher labour costs, and absorb them instead, denting their already historically high margins. That won't do earnings any favours either. Whether it ends with a bang or a whimper, the S&P 500's long bull market is starting to run out of puff.
-
Trouble brews in B&M as bargain shops take a hitOpinion Once a stock market darling, B&M's share price has slumped. What has gone wrong for bargain shops?
-
US and China reach a ceasefire in their trade war after talks in LondonThe US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
-
Crash? What crash?Sponsored October is often said to be a month of stockmarket crashes. But that's not true for this year, says Max King. A host of positive triggers are lining up for equities, says Max King.
-
The end of cheap money hits the marketsNews Markets have swooned as central banks raise interest rates, leaving the era of cheap money behind.
-
Are stocks back in a bull market or is this just a bear market rally?News The S&P 500 index gained 17% between its June lows and 16 August, while the Nasdaq Composite rose more than 20%. So are stocks back in a bull market or is this just a brief rally before they resume their slide?
-
Enjoy the bear market rally while it lastsNews Investors seem to think that a weaker US economy will cool inflation and see the Fed relent on interest rate rises. But that optimism may be misplaced, with July’s stockmarket gains looking very much like a bear-market rally.
-
Low growth and high inflation: a toxic cocktail for anxious marketsNews Low growth, high inflation, central bank tightening, a strong dollar, and the risk of recession is proving a toxic cocktail for world stockmarkets – and for emerging markets in particular.
-
Here’s why markets welcomed America’s big interest rate riseAnalysis The US Federal Reserve raised interest rates by half a percentage point – the biggest hike in 20 years. So why did markets rise? John Stepek explains what's going on, and what it might mean for you.
-
Can stockmarkets continue to keep their cool in 2022?Sponsored Stockmarkets have recovered well from their recent lows, says Max King. But can that continue?
-
Why Amazon is splitting its sharesAnalysis Slicing a cake into more pieces doesn’t give you more cake. So why is Amazon dividing its shares by 20?
