Bull or bear market? AI spurs rethink of traditional market measures

Wall Street's traditional bear market definition of a 20% drop in a major index is being challenged as tech indexes experience frequent daily gains and losses while still posting strong annual growth. Art Hogan, chief market strategist at B. Riley Wealth, argues that the current vocabulary is too simplistic for volatile market conditions.

The Philadelphia Semiconductor Index and South Korea's tech-heavy KOSPI have already entered bear markets according to traditional measures, but both have still risen 46% and 25% respectively for the year. Steve Sosnick, chief strategist at Interactive Brokers, suggests that these labels may not be appropriate for indexes with such dramatic fluctuations.

The debate over what constitutes a bear market has been ongoing since the 1928 S&P 500 bear market, which averaged 9.6 months in duration. While some suggest incorporating factors like length of decline, volatility, and broader economic factors, the lack of consensus means many investors may continue relying on their experience rather than strict thresholds to navigate the market.