The stock market has climbed a wall of worry to start the year and is nearing a bull market. Now the fun part begins.

Entering 2023, doubters argued that stocks were expected to take a fall as the “bear-market rally” off the October lows faltered. The Federal Reserve had been rapidly lifting interest rates, raising the cost of capital for everything from start-ups to banks. The economy was slowing to the point that a recession had become a question of when, not if. Corporate profits had stagnated, and stocks outside a handful of large technology names had floundered.

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Despite the underlying weakness, the S&P 500 index appeared expensive, particularly given where profits appeared to be heading. Adding to the sense of unease, the index couldn’t seem to crack 4200, suggesting some unknown risk limiting the market’s upside.  

Yet through it all—the debt-ceiling standoff, a banking minicrisis, and a potential earnings slump—the market has held its own and then some. And what the bears have apparently forgotten is that stocks are always looking forward, not back. All of the hand-wringing over a possible recession can’t hide the fact that the S&P 500 already suffered through a bear market in 2022.