Investors are finally experiencing the 'everything' bull market - and it may last, this strategist says

By Steve Goldstein

The Fed's interest-rate cuts allow for a broad-based rally, says Jim Paulsen

It's looking like another record day for Wall Street after upbeat Micron Technology results combined with news of more support by China for its economy to cheer up investors.

Get used to it, says Jim Paulsen, the former Wells Fargo investment strategist. Paulsen says this bull market has been unique because, up until last week, the Federal Reserve has been fighting against it.

"Traditionally, bull markets are ignited because rising recession fears cause the Fed to ease monetary policy even before a bull market begins," he said in a post on Substack. "As a result, the stock market suddenly enjoys several positive forces it previously did not receive."

That support include bond yields declining, inflation moderating, quickening money supply and expanding fiscal support - which in combination begins to boost consumer and business confidence. "It is this cocktail of 'full support' at the front end of a bull market which commonly has created an 'Everything Market' during the early part of a new bull. That is, for a period, almost everything simultaneously rises - value, growth, small, large, defensive, and cyclicals - and usually by a lot," he says.

That is what has made this bull market unique - up until recently, it's had narrow leadership, with most stocks left behind. "Because this bull never received full support, the economy has never exhibited animal spirit behaviors and the stock market rarely had euphoric investors. The traditional everything bull was essentially postponed by a tardy and unconventional Fed policy which uniquely withheld full support from this bull market," says Paulsen.

Now that's changing. "Short rates are falling, bond yields have declined, money growth is rising, fiscal stimulus has again expanded, disinflation is still evident, and because of this new and overwhelming support, expectations for a soft landing should grow while both consumer and business confidence improves," he says. (As a caveat, it should be noted that consumer confidence is still glum, as seen in the Conference Board's September index and ISM manufacturing sector readings.)

That's why the rally is now more broad-based. Since the Aug. 5 low, he notes that 90% of S&P 500 index stocks have risen in price, of which 45% are up to by at least 10% and 70% up by at least 5%. Six different sectors have seen gains of at least 10%. Those gains also extend outside the United States, where the MSCI world ex-U.S. is finally beating the S&P 500.

Paulsen says everything markets typically don't last more than six months to a year. He expects this one to be in force at least for "the next several months. Although the road ahead, even if some of my thinking proves correct, will still be interrupted by regular bouts of volatility, investors may want to consider staying bullish during the next several months, finally enjoying a mini restart to this bull market, and perhaps witness what full support can do for your portfolio."

The market

U.S. stock index futures (ES00) (NQ00) pointed to a strong start early Thursday. Oil (CL00) futures fell. The Hang Seng HK:HSI hit a new one-year high on a report of possible capital injection to banks.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              5722.26    1.85%   2.33%   19.97%  33.87% 
   Nasdaq Composite                                                     18,082.21  2.90%   3.00%   20.46%  38.11% 
   10-year Treasury                                                     3.774      5.90    -9.10   -10.69  -80.38 
   Gold                                                                 2692       3.07%   5.38%   29.94%  43.06% 
   Oil                                                                  68.69      -3.42%  -9.64%  -3.70%  -25.17% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Initial jobless claims fell 4,000 to 218,000, as durable-goods orders in August were flat.

There's a heavy day of commentary by Fed speakers, mostly at a Treasury market conference.

Micron Technology stock (MU) jumped on an upbeat outlook for earnings and sales on strong demand for its chips in artificial intelligence uses.

OpenAI is set to become a for-profit company as its chief technology officer resigned.

Meta Platforms (META) unveiled a cheaper virtual-reality headset and showed a prototype for holographic glasses.

A temporary ceasefire between Israel and Hezbollah looked likely after the U.S., France and other allies backed a 21-day truce.

New York City mayor vows to stay in office despite criminal indictment.

Best of the web

Saudi Arabia ready to abandon $100 crude target to take back market share.

Google paid $2.7 billion to bring back an AI genius who quit in frustration.

Silicon Valley entrepreneurs are releasing pollutants in a bid to cool the planet.

The chart

Bitcoin tends to do well when stocks and other risky assets do well - but what about the other way around? Strategists at Ned Davis Research found that when bitcoin does well, so does the S&P 500, as well as gold. From July 2010, the S&P 500 annual gains are 12.65% when the bitcoin moving average cross indicator is bullish, compared to 10.17% when it's bearish. S&P performance also is best when bitcoin's short-term indicator is bullish.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   MU      Micron Technology 
   NIO     Nio 
   HOLO    MicroCloud Hologram 
   TSM     Taiwan Semiconductor Manufacturing 
   DJT     Trump Media & Technology 
   BABA    Alibaba 
   AAPL    Apple 

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-Steve Goldstein

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09-26-24 0834ET

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