- It’s been two years since the S&P 500 went down during the COVID-19 bear market of March 2020.
- Since then, the two-year-old bull market has been the strongest and fastest growing market on record.
- According to LPL, the three charts help illustrate the strength of the current stock bull market and where it could go from here.
The current bull run in the S&P 500 has turned two years old, after dropping 34% in one month and experiencing its steepest bear market in history.
According to a Wednesday note from LPL Research, the S&P 500 found its low on March 23, 2020, and since then the index has staged the fastest and strongest recovery since World War 2.
“At its recent peak in early January, the S&P 500 index was up 114%, making it its seventh bull market doubling. The annualized return of 53.4% shows how explosive this move was and how May be warranted,” said Ryan Detrick, chief market strategist at LPL.
One of the strengths seen in the current bull market was its profit momentum, which was seen early in its recovery. According to LPL, the current bull market was the fastest rally since World War II to double in just 18 months.
And as compared to the doubling bull market, the current rally posted the best return on its two-year anniversary, according to LPL. The S&P 500 has returned 102% from its 2020 lows, just ahead of the nearly 95% return on its two-year anniversary of the 2009 bull market.
So where could the current bull market in stocks go from here as it enters its third year? According to LPL Research, higher than the first two years of the current bull run, but with more volatility and lower returns. That’s because bull markets that saw such strong returns before it typically spend their third year moving sideways and consolidate their recent gains before moving higher.
“As this bull market approaches the third year of life, investors need to remember that three bull markets in that year are a little tamer, with big gains in years one and two. Since World War II Of the 11 bull markets, we found that three of them ended during year three, while those that didn’t saw an average gain of only 5.2%,” Detrick said.