Decade-Long Bull Market Heating Up Again as Yearly Gain Hits 22%

(Bloomberg) --

It’s old, but it’s not slowing down.

A bull market that traces its lineage to the depths of the financial crisis is revving up again, notching its fourth straight weekly gain and pushing its advance in 2019 past 22%. After wavering at mid-year amid a U.S.-China trade war and recession anxieties, American stocks are back in melt-up mode, ending three of the past five sessions at records.

While nobody knows if it’s getting late for this decade-old rally, gains like these have been common at the tail end of bull markets past. A study by Bank of America Corp. on equity peaks since 1937 shows that being uninvested in the last year of an advance meant foregoing one-fifth of the rally’s overall return.

The S&P 500 powered to a fresh high Friday after an unexpectedly strong hiring report offered hope that the labor market can propel consumer spending and extend the record-long expansion despite weak business investment and trade tensions. Stocks got a brief boost and the dollar pared losses after China’s Ministry of Commerce said trade negotiators had achieved a “consensus in principle” with the U.S.

The latest economic data come after the Fed lowered rates Wednesday and signaled it is unlikely to make further changes, up or down, any time soon. That sent stocks to a record, before a batch of weak economic data and renewed worries over trade weighed on the measure Thursday. The S&P 500 is up 1.5% in the week. Fed Vice Chairman Richard Clarida reiterated in Bloomberg Radio interview that monetary policy is “in a good place” and the consumer is strong.

The jobs report “reinforces the thesis that the economy is hanging in there with steady growth thanks to the consumer, jobs, low rates, strong housing and that the global picture is weak,” said Alec Young, managing director of Global Markets Research at FTSE Russell.

Friday’s good news on the trade front follows a tough Thursday session that saw markets rattled as Chinese officials cast doubts about reaching a comprehensive long-term trade deal with the U.S.

In earnings news, Exxon Mobil and Chevron reported solid results, while Alibaba Group Holding Ltd. rose after its report. European bonds slipped. Oil edged higher though headed for its biggest weekly loss in a month on swelling American stockpiles. Earlier, risk sentiment got a boost from better-than-expected Chinese manufacturing data, even as uncertainty remains over an interim trade deal. Gold fell after a 1% rally Thursday.

“Markets participants, as well as maybe even the Fed, have been very optimistic” on the trade truce, Tiffany Wilding, chief U.S. economist at Pacific Investment Management Co., told Bloomberg TV. “We can see some more deterioration there.”

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 1% as of 4 p.m. New York time.
• Th Dow Jones Industrial Average added 1.1%.
• The Stoxx Europe 600 Index gained 0.8%.
• The MSCI Asia Pacific Index gained 0.3%.
• The MSCI Emerging Market Index advanced 0.7%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%.
• The euro rose 0.1% to $1.1167.
• The British pound was flat at $1.294.
• The Japanese yen fell 0.1% to 108.178 per dollar.

Bonds

• The yield on 10-year Treasuries gained two basis points to 1.71%.
• The two-year yield added three basis points to 1.55%
• Germany’s 10-year yield gained three basis points to -0.382%.

Commodities

• Gold futures was flat at $1,510.70 an ounce.
• West Texas Intermediate crude gained 3.5% to $56.10 a barrel.

--With assistance from Alexandra Harris, Constantine Courcoulas and Reade Pickert.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Yakob Peterseil

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