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Are stocks in a new bull market? It depends on.

The S&P 500, the index obsessed by investors, executives and government officials, was close to closing 20 percent above its 2022 low on Monday, a gain that some on Wall Street see as the start of a bull market and a new phase of investing glut.

The index hovered around the threshold on Monday, moving above it several times, before finishing 0.2 percent lower for the day.

The measure nevertheless underlines the strong recovery in the stock market since fears of high inflation, rising interest rates and a looming recession had steadily and menacingly pushed the index down from its peak in early 2022. The S&P 500 fell into a bear market – which is defined as a decline of 20 percent or more from an index̵[ads1]7;s high – in June of that year, and continued to slide until it hit a low in October.

The terms “bull” and “bear” are shorthand for excitement or fear among investors about the outlook for public companies. But while investors tend to agree on how to mark the start of a bear market, there is less agreement on how to define the start of a bull market, especially when the concerns that originally dragged stocks down still linger.

A rule of thumb is that a new bull market is confirmed when an index makes a new high after rising from a bear market low. By that target, the S&P 500 is still more than 10 percent short.

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

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

Still, a 20 percent increase from a low is, mathematically speaking, less significant than a 20 percent drop from a high. Other investors prefer an assessment that involves a broader look at investor sentiment, economic growth and the direction of the market.

“If a stock goes from $10 to $5 and then rises to $6, it’s not in another bull market,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “Defining a bull or bear market, however it is done, should be done via a broad view of the market.”

The recent rally in the S&P 500 has been led by a small group of technology stocks fueled by enthusiasm about the profit-generating possibilities of artificial intelligence, especially for those at the heart of developing and manufacturing the hardware needed to power it. Nvidia, the chip maker, has come to symbolize this newfound enthusiasm for AI because the semiconductors are used in the technology. The company has risen nearly 170 percent this year — gains that have brought its valuation close to $1 trillion.

The average individual stock in the S&P 500 has risen less than 3 percent this year, market data showed through Friday’s close, compared with a gain of more than 11 percent for the index as a whole. About 90 percent of the index’s rise is due to bumpers for just seven of the biggest companies: Amazon, Apple, Meta, Microsoft, Nvidia, Tesla and Alphabet, the parent company of Google.

Apple rose 2.2 percent early Monday afternoon, briefly marking a new high for the company, before ending 0.8 percent lower, weighing on the index.

The S&P 500 also tracks only the largest companies listed in the United States. Smaller companies are generally more exposed to fluctuations in the US economy, because larger companies generate a significant proportion of their revenue overseas.

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

In contrast, the Nasdaq Composite index, which is heavily weighted towards large technology companies, has risen more than 26 percent this year alone. Nevertheless, it is almost 20 percent below the previous peak, which was reached at the end of 2021.

“I think the 20 percent rule has been easy for people to follow,” said Sameer Samana, a senior global market strategist at the Wells Fargo Investment Institute. “Unfortunately, some of these bear market rallies trigger that threshold, which we see as a false signal.”

For many investors, the large returns in the stock market have not been reflected in their portfolios’ performance. That’s because with so much concern about a possible recession, fund managers are largely holding more cash and hedging their holdings against the risk of a steep drop, forgoing gains in favor of greater safety.

Just over 27 percent of the funds tracked by Morningstar that are benchmarked to the S&P 500 beat the index this year, compared with nearly 52 percent last year and an average of 40 percent since 2000.

In particular, hedge funds and other leveraged investors have built up large bets on the S&P 500 falling, according to data from the Commodity Futures Trading Commission.

“Everyone has been so defensive,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “There’s a lot of money on the sidelines, and so this is actually quite painful for a lot of fund managers.”

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