Why Wall Street Is Not Celebrating S&P 500 Record Highs

Hugo Ste-Marie, CFA Analyst Scotiabank GBM

June 19, 2017

U.S. equities are trading near record highs, and the S&P 500 bull market that started in 2009 is en route to being one of the longest and most powerful in history but it doesn’t feel like it.

Investor sentiment shows very little sign of froth and greed as is usually the case after a long bull run. This chart illustrates job growth on Wall Street, or more exactly in the securities industry (underwriters, brokers, portfolio managers of assets, trust, fiduciary, etc.).

The chart shows that job growth in the industry tends to track the S&P 500. While the bull markets of 1999 and 2007 generated solid job growth in the business, the latest S&P 500 advance has failed to deliver the type of job growth seen in the past two bull markets and has left Wall Streeters far behind. In fact, while the S&P 500 is 56% higher than its October 2007 peak, the head count in the industry has increased by less than 2%, rising from 923k jobs to 939k. No wonder Wall Street is not celebrating market highs as it used to, and the bull market appears poised to continue.