S&P 500 Traders Hope This Round Number Is Kinder Than Last

(Bloomberg) -- As traders celebrate a thousand-point breakthrough for the S&P 500, they’re trying not to think too hard about the last one.

It took around 1,800 days for the benchmark gauge of American equities to travel the thousand points to 3,000, a feat it completed Wednesday, thanks to Federal Reserve Chairman Jerome Powell’s dovish testimony to Congress. Anyone who was around back when 2,000 was breached in 2014 remembers the stretch not for its round-number symmetry, but as the start of one of the longest fallow periods in bull-market history.

The index first cleared 2,000 on Aug. 26 of that year. Eighteen months and two corrections later, it was still stuck there, as plunging oil, currency drama in China and, yes, concern about the Fed pinned bulls back. It wasn’t until the recovery from the tumble that followed the Brexit vote that the index got fully clear of the level.

“It’s been the most ungratifying bull market,” said Aaron Clark, portfolio manager at GW&K Investment Management. “But the fundamental trends that dictate higher stock prices have been supportive of that and are heading in the right direction.”

For the record, there were 1,779 days between 2,000 and 3,000, a journey that lifted the overall market capitalization from $18.3 trillion to $25.7 trillion. Helping the index with its final push was Powell, perceived as taking the Fed closer to cutting interest rates this month.

The last thousand points included a global growth slowdown in 2015, an earnings recession at home, Brexit, eight Fed rate hikes, rising yields, falling yields and expectation for a rate cut. The S&P 500 made it all the way without posting a 20% slump.

Despite the uncertainties, the road from 2,500 to 3,000 was faster than the previous 500-point ascent. It took the index 1,116 days to go from 2,000 to 2,500, and half as long till today.

“This shows the market and, actually, our economy is pretty resilient,” said Kim Forrest, chief investment officer at Bokeh Capital Management in Pittsburgh. “All of the this, all of the events that have happened in the past year and yet here we are in usually a pretty lackluster time for the market, we’re going up.”

The S&P 500 gained as much as 0.8% to 3,002.98 on Wednesday, before paring gains to 2,991.

“The Fed has delivered everything the market wanted,” said Alex Bellefleur, chief economist and strategist at Mackenzie Financial Corp. “Now, the trade war is a more ambiguous topic and things are kind of on hold, and that can have a big short-term impact on the U.S. market. On a positive front, people were very concerned about U.S. growth. That’s going back down a bit.”

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi, Rita Nazareth

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