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Market Further: Why the S&P 500 is knocking on the door of its first document shut in 6 months

Millions of Americans are unemployed due to business closings due to the COVID-19 pandemic, but you wouldn't know about that from the S&P 500.

The broad market index is about to hit its first record high since February 19, a period of 121 trading days, including Tuesday's action.

The S&P 500 is within 1% of its February record of 3,386.15, with a move above that level representing a staggering rebound after stocks rose nearly 34% to a current bear market low of 2,237.40 on March 23 have fallen.

Since March, Nadir, the S&P 500
SPX,
+ 1.38%
is up 51% during the Dow Jones Industrial Average
DJIA,
+ 0.89%
– within 5% of its record close on February 12th – is up just over 51% and the tech-rich Nasdaq Composite Index has risen
COMP,
+ 2.14%
has increased about 60% over the same period this year and has achieved 32 closing records.

Much has been done about crossing the stock market from lows to levels at or near record levels while the economy, while improving, remains in ruins after the worst public health disaster in generations.

The fact that stock indices have returned from the coronavirus abyss may not necessarily change the outlook for the economy or make the gains made so far more sustainable, but it is confirmation for some market experts that the trend has been consistently higher and could be given the above Optimism about potential vaccines, subtle improvements in parts of the business climate, better than feared corporate earnings, and investor willingness to bet on the future despite uncertainty continue to be so high.

"With the second wave of the virus under control and jobs and spending continuing to recover faster than expected, corporate profits are above expectations and appear on track to return to pre-pandemic levels ahead of schedule," wrote Brad McMillan, Chief Investment Officer of the Commonwealth Financial Network, in emailed comments.

Whatever the case, if the stock market hits a record close in the coming days, not only will it close the circle of stocks in nearly six months, but it will also be the official end of the bear market for investment purists who believe it is a bear market or drop from 20% from a recent high to remain in effect until an asset is able to make a new high from its bear market low.

Here's how big we got from there to here.

Dow Jones market data

Over 63%

Consumer Discretionary, which includes Amazon.com Inc.
AMZN,
+ 2.65%,
They were the top performers from the March low to date, according to Dow Jones Market Data. This segment of the 11 sectors of the S&P 500 has gained more than 63% since March as of Monday. The benchmark's materials sector, led by gold mining giant Newmont Corp.
NEM,
+ 1.90%,
was the second best performer, up nearly 62%, while information technology, particularly Nvidia Corp.
NVDA,
+ 4.98%
and PayPal Holdings
PYPL,
+ 1.31%,
The data show a return of almost 60% from the low (see attached table).

The tech sector's weighting is by far the largest in the S&P 500, up from 24.78% at the end of 2019 to 27.61%, led by megacap companies like Apple Inc.
AAPL,
+ 3.29%,
Microsoft Corp.
MSFT,
+ 2.70%
and google parent alphabet
TogetL,
+ 1.67%.
Other high-flyers that are often mentioned in the same breath as tech companies include Facebook Inc. FB and Netflix Inc. NFLX, communications services, and Amazon, a consumer discretionary tool. However, these companies aren't tech stocks under the S&P 500 categorization

The consumer discretionary sector has now increased from 9.89% to 11.1%, while the industrial sector has decreased from 8.89% to 8.07%.

Investors have indicated that a recent decline in the boom has given tech companies more leeway for other market sectors as investors have described it as a necessary expansion of market breadth.

"All it took for the S&P 500 to hit the high was an extension of the rally to finance and energy," said Jamie Cox, managing partner of Harris Financial Group. "We're there and that's a good thing," he said.

Less than 310 days? Quick recovery

The S&P 500 rebound is on the verge of becoming the fastest in history, just as the decline from a record low to a bear market low was the fastest decline in history.

The current record for the S&P 500 from a bear market to a new record was the 310 trading days the index went from its low of February 9, 1966 to a record on May 4, 1967, according to Dow Jones Market Data. It took only 16 trading days for the S&P 500 to fall at least 20% from its February 19 high, which was the textbook definition of a bear market.

The average recovery from a bear market takes 1,447 trading days.

Dow Jones market data

On average, a bear market for the Dow lasts 206 trading days, while the average bear market for the S&P 500 is around 146 days, according to data from Dow Jones Market Data.

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