Are stocks in a new bull market? It depends.

Obsessed with investors, CEOs and government officials, the Standard & Poor’s 500 Index on Monday came close to finishing 20 percent above its 2022 low, a gain seen by some on Wall Street as the beginning of a bull market and a new phase. From investing abundance.

The index fluctuated around the threshold on Monday, moving above it several times, before closing down 0.2 percent for the day, putting it at 19.5 percent above its October low.

However, the move underscores the strong recovery in the stock market as fears of soaring inflation, rising interest rates and a looming recession have pushed the index steadily lower from its peak in early 2022. The S&P 500 is in a bear market – which has been Defining it as a decline of 20 percent or more from the index’s high – in June of that year, and continued to decline until it reached its lowest level in October.

The terms “Bull” and “Bear” are shorthand for excitement or fear among investors about the prospects of public companies. But while investors tend to agree on how to define the start of a bear market, there is less consensus on how to define the start of a bull market, especially when the fears that initially drove stocks lower still remain.

One rule of thumb is that a new bull market is confirmed when the indicator sets a new high after rising from the bottom of the bear market. By that measure, the S&P 500 is still short by more than 10 percent.

But some investors say it’s easier to view any gain of 20 percent or more in a broad index like the S&P 500 as a milestone, As measured at the end of the trading day. More than $15 trillion in investment assets are measured or indexed to the S&P 500, according to S&P Dow Jones Indexes, which manages the index.

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“We’re not in a terrible situation,” said James Masserio, co-head of Americas equities at Société Générale. There are recessionary risks for sure, but we’ll have to see how those risks materialize over several months and into next year. So technically, this is a bull market.

However, a 20 percent rise from a low is, mathematically, less significant than a 20 percent drop from a high. Other investors prefer an assessment that includes a broader view of investor sentiment, economic growth, and market direction.

“If a stock goes from $10 to $5 and then goes up to $6, it’s not in a new bull market,” said Peter Boockvar, chief investment officer at Blaakley Financial Group. “Identifying a bullish or bearish market, whatever that may be, has to be done with a broad view of the market.”

The recent rally in the S&P 500 has led a small group of technology stocks driven by enthusiasm about the profit-generating potential of artificial intelligence, especially for those at the heart of its development and production of the hardware needed to run it. Nvidia, the chip maker, has come to symbolize this newfound enthusiasm for artificial intelligence because semiconductors are used in the technology. The company is up about 170 percent this year — gains that have brought its valuation close to $1 trillion.

Average individual stocks in the S&P 500 are up less than 3 percent this year, market data through closing offers Friday, compared with gains of more than 11 percent. percent of the index as a whole. About 90 percent of the index’s rise was due to bumper gains for just seven of the biggest companies: Amazon, Apple, Meta, Microsoft, Nvidia, Tesla and Alphabet, Google’s parent company.

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Apple shares rose 2.2 percent in early Monday afternoon, marking a new high for the company for a short period, before falling 0.8 percent lower, weighing on the index.

The S&P 500 also tracks only the largest companies listed in the United States. Small businesses are generally more vulnerable to fluctuations in the US economy, because larger companies generate a large share of revenue overseas.

The Russell 2000 Index, which tracks smaller public companies, has recently posted more modest gains than its counterpart in large companies. The index fell by more than 30 percent from its peak in November 2021 to its lowest level last June. Since then, the index has risen about 9 percent. On Monday, the index fell 1.3 percent after weaker-than-expected economic data on the services sector.

In contrast, the Nasdaq Composite Index, which is heavily weighted toward big tech companies, is up more than 26 percent this year alone. However, it is still about 20 percent lower than its previous peak, which was reached in late 2021.

“I think the 20 percent rule was easy for people to follow,” said Sameer Samana, senior global market analyst at Wells Fargo Investment Institute. “Unfortunately, some of these bear market rally triggers that threshold, which we view as a false signal.”

For many investors, the bountiful returns in the stock market have not been reflected in the performance of their investment portfolios. This is because with so much worrying about a potential recession, fund managers are largely holding more liquidity and hedging their holdings against the risk of a quick fall, giving up gains in favor of more safety.

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Just over 27 percent of Morningstar-tracked funds as measured by the S&P 500 index have outperformed the index this year, compared with about 52 percent last year and an average of 40 percent since 2000.

Hedge funds and other leveraged investors in particular have built big bets on a decline in the S&P 500, according to data from the Commodity Futures Trading Commission.

“Everyone was very defensive,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “There is a lot of liquidity on the margins, and this is very painful for a lot of fund managers.”

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