U.S. stocks’ recent momentum has been historically impressive by many measures, and the Nasdaq Composite Index notched another milestone last week.
The Nasdaq has risen for the past 10 weeks, its longest winning streak in 19 years. As shown in the LPL Chart of the Day, the feat could signal more gains for U.S. stocks: In seven of the last eight 10-week winning streaks, both the Nasdaq and the broader market have climbed over the following 12 months.
Technology stocks have rallied 23% since bottoming on December 24, 2018. While equities began the year extremely oversold, solid corporate earnings, a Federal Reserve pause, and progress on trade have helped fuel risk-on sentiment and boost prices.
“We expect stocks to power through periodic bouts of uncertainty,” said LPL Research Chief Investment Strategist John Lynch. “While the road to new market highs could get bumpy, we encourage investors to focus on the fundamentals supporting economic growth and corporate profitability in 2019.”
The one outlier in Nasdaq’s history of 10-week streaks is the one ending in December 1999, three months before the peak of the “tech bubble.” From the beginning of 1999 to March 2000, the Nasdaq more than doubled to reach record highs, then fell more than 70% through the end of 2002.
In contrast to that period, we don’t see material signs of excesses in financial markets, and the recent rally has been more broad-based and backed by strong earnings growth. The S&P 500 Index and Dow Jones Industrial Average have both climbed 16% over the past 10 weeks, pacing with the Nasdaq’s 20% gain.
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