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The Nasdaq escapes longest bear market — by one measure — in 28 years

MarketWatch logo MarketWatch 2/15/2019 Mark DeCambre
a close up of a map© Dow Jones Market Data

The Nasdaq Composite Index, often used as a proxy for the health of technology and internet-related stocks, on Friday was on the verge of ending one of its longest bear market, by one measure, since 1991.

The Nasdaq closed on Friday at 7,472.41, eclipsing by a healthy margin the 7,431.50 for the Nasdaq (COMP) need to rise 20% from its recent low on Dec. 24 at 6,192.92. That 20% climb from a bear-market low is a commonly used definition for an exit from bear-market territory.

The Nasdaq entered the corrective phase on Dec. 21, closing more than 20% below its all-time high set on Aug. 29 at 8,109.69, meeting the widely accepted definition for entering a bear market.

After continuing its fall through Christmas Eve, marking its most recent bear-market low, the index has punched higher alongside other major benchmarks. The Nasdaq now stands about 7.9% shy of that August record, after booking eight straight weekly gains, representing the longest string of weekly wins since Aug. 19, 2016, according to FactSet data.

a close up of a map: Nasdaq in rally mode?© Source: FactSet Nasdaq in rally mode?

The Nasdaq has gained 12.6% so far in 2019, while the S&P 500 index (SPX) has gained 10.7%, and the Dow Jones Industrial Average (DJIA) has climbed 11%, as of Friday’s finish (The Dow and S&P 500 exited correction territory on Jan. 10, usually defined as a decline of at least 10% from a recent peak. The pair of indexes never fell the requisite 20% to enter bear market.)

The current bear run from its low at 37 trading days, which is the longest such period since a 69-day stretch that ended in January 1991 (see chart below):

a screenshot of a cell phone

From entry to exit, the current bear market would be the longest bear market run since the 218-day bear market in 2008, according to Dow Jones Market Data.

The Nasdaq’s gains have come as major tech and internet-related components, which had helped to jolt the market higher during its lengthy bull-market run, have rebounded after a slump. The so-called FAANG cohort, made up of Facebook Inc. (FB) Amazon.com Inc. (AMZN) Apple Inc. (AAPL) Netflix (NFLX) and Google-parent Alphabet Inc. (GOOG)(GOOGL) are decidedly higher so far this year.

Last year’s weaker performers have so far led the way, with Netflix shares up 33% so far in 2019 and Facebook shares gaining 24% over the same period, producing the sharpest gains among the FAANG stocks.

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