The research firm pointed to unusually low volatility in the stock market, with the S&P 500’s current realized volatility gauge measuring at 0.8% over the last 100 days. That puts the benchmark index “solidly in bull market territory,” as the bull/bear market line has held around 1.1% since April, according to DataTrek cofounder Nicholas Colas.

Bull markets tend to be less volatile than average, while bear markets are more volatile than average, Colas said, as bull market investors slowly evaluate stock fundamentals and macro conditions before buying into the rally. During the last four US bear markets, for comparison, the realized S&P 500 volatility fluctuated between 1.5%-3.9%.

“If the S&P were rallying on high volatility (choppy stretches of up and down days), that would be a warning sign that all was not well. This, however, is not the case just now. Instead, we have a slow-motion melt up,” Colas said. “This means investors have not only bought into the idea that stock prices will go higher, but also that it is worth their time and effort to make sector-specific bets away from Big Tech.”

Wall Street commentators have also pointed to a number of bullish catalysts coming up that could fuel more stock gains. Inflation, for one, is cooling, which can lower cost pressures on businesses. Investors also expecting the Fed to pause interest rate hikes at its September policy meeting, another positive for equities, as aggressive rate hikes caused the S&P 500 to slide 20% in 2022.

Economic forecasters are also dialing back their predictions of a coming recession, contrary to views expressed in 2022. The odds of a downturn over the next 12 months have dropped from 25% to 20%, Goldman Sachs said in a recent note. The median recession estimate on Wall Street, meanwhile, has been lowered from 61% to 54%, according to the Wall Street Journal’s latest survey of economists.

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