A bull market is a rise of 20 percent or more over a period of at least six months, following a decline of 20 percent or more. The run-up over the past five years has been helped by stimulus from the Federal Reserve, record corporate profits, the economic recovery and companies repurchasing their own stock.
The current bull had a tough start to 2014. In January, the S&P 500 index fell 3.6 percent on concerns about slowing growth in China and other emerging markets. Investors also worried about the strength of the U.S. economy. This month, the market has been rattled by events in Ukraine, where the region of Crimea is preparing for a referendum on whether to split away and join Russia. President Barack Obama and several other Western leaders have condemned the referendum.
Despite the latest setbacks, stocks recovered and the S&P 500 index closed at a record high of 1,878.04 on Friday.
There have been 11 bull markets since 1945. The longest one stretched for almost a decade, between October 1990 and March 2000. The average bull market lasts 4½ years, making the current one longer than average.
The last bull market ended in October 2007, as the financial crisis was taking hold. The S&P 500 index dropped 57 percent from a record high of 1,565.15 on Oct. 9, 2009, before bottoming out at 676.53 on March 9, 2009.
Typically, bull markets end when investors get spooked by a recession, or anticipate one, and sell stocks. None of that is happening, which suggests this bull may have room to run yet. The economy appears to be strengthening rather than faltering. Corporate profits are at record levels. The job market is gradually improving and consumer confidence is rising.
Inflation also remains low. When the Fed starts to worry about rising prices, it hikes interest rates to curb them. The higher rates can tip an economy into recession and prompt a sell-off in stocks.
But with inflation under control, the Fed has stressed that it plans to keep its key short-term rate near zero for an extended period.
Stock valuations remain in line with historical averages, says John Manley, chief equity strategist at Wells Fargo Fund Management. The price-earnings ratio for the next twelve months, which measures stock prices compared with forecast earnings, stands at 15.5, slightly below its 20-year average of 16.4.
The stock market is "not cheap, but it's not expensive either, so I think the market continues to move higher until further notice," Manley says.
The bull market's gain is above the average advance of 141 percent for S&P 500 bulls. But it is well short of the 417 percent jump from October 1990 to March 2000.
Here is what's changed since the bull run began:
Here's what you could've won • Since starting its advance in March 2009, the S&P 500 has handed investors a total return, including reinvested dividends, of 209 percent. If you'd played it safe and invested in bonds, your total return would be 28 percent over the same period, according to the Barclays U.S. aggregate index, which tracks the broader debt market. If you'd played it even safer and invested in short-term government debt, certificates of deposit and other short-term debt securities, your return would be even smaller. Fidelity's money market fund, which makes such investments, returned 4.1 percent over the same period.
Best performers • The best-performing stocks in the S&P 500 index during the five year bull market are a drugmaker, a hotel company and a broadcaster. Regeneron Pharmaceuticals, which is developing an experimental asthma drug, has climbed from $12.40 in March 2009 to $328.11 on Friday. That's a cumulative return of 2,546 percent, making it the best-performing stock since the start of the rally. Wyndham Worldwide, a hotel and lodging company that owns the Ramada and Days Inn, has soared from $3.10 to $75.70 as demand for hotels revives. The company has also raised its dividend. CBS has climbed from $3.09 to $67.40 as advertising revenue increased.
The laggards • Among stocks still in the S&P 500 index since the start of the bull market, the worst performers are a solar panel maker, a mining company and a supplier of wholesale electric power.
First Solar's shares are down from $108.36 to $56.11, a drop of 48 percent. The company has struggled to adapt to sharply lower panel prices. Newmont Mining has dropped from $37.79 to $24.60, hurt by falling gold and copper prices. Exelon, the nation's largest supplier of wholesale electric power, has dropped from $43.84 to $29.82 as electricity prices have fallen.
The economy • When the stock market hit rock bottom, the economy was struggling, too. Jobs were harder to find five years ago and the U.S. had yet to emerge from the Great Recession. Economic growth has since strengthened, but the recovery remains slow.
When the bull market began in March 2009 the unemployment rate was 8.7 percent. It rose to 10 percent in October that year, its highest level in 26 years. It has since fallen, and was 6.7 percent in February.
Company profits • S&P 500 companies earned an average of $60.81 per share in 2009. Those earnings are projected to almost double to $118.16 by the end of this year, according to S&P Capital IQ data. Corporate profits have climbed as companies have cut costs and demand has revived.
New faces • Twitter shares now trade in the stock market, following its initial public offering in November. Facebook had a $16 billion IPO in May of 2012 and became a member of the S&P 500 in December. Outside of social media, luxury clothing and accessories maker Michael Kors has been one of the more successful market debutants. Its IPO was in December 2011 and it joined the S&P 500 in November.
Return of the rich • Like the stock market, billionaires have also staged a comeback.
In 2009, the number of billionaires in the world shrank by 30 percent to 793, with an aggregate wealth of $2.4 billion, according to Forbes. The latest list of billionaires published last week shows that their ranks have more than doubled to 1,645, with a combined wealth of $6.4 trillion. The rebounding stock market has helped boost those numbers.
Bill Gates is back on top this year as the world's richest person. The Microsoft founder and philanthropist reclaimed the spot from Mexican telecom mogul Carlos Slim Helu, who topped the list for the previous four years. Gates' net worth is estimated at $76 billion, compared with $40 billion in 2009.
Car comeback • The American auto industry has roared back. Crushed by unsustainable debt and sliding sales, General Motors filed for bankruptcy on June 1, 2009, and got government funding to help it recover. Since then, it has ditched its Pontiac, Saturn, Hummer and Saab lines. The automaker returned to the stock market in November 2010. Its stock closed at $37.69 on Friday, and is up 35 percent in the past year. Chrysler also filed for bankruptcy and has been acquired by Italian automaker Fiat. The only big U.S. automaker to avoid bankruptcy was Ford. Its stock has surged from $1.74 in March 2009 to $15.62 as of Thursday gain of 800 percent.