What characterizes a bullish market?

A bullish market is characterized by rising stock prices coupled with a generally positive economic outlook. When stock prices are increasing, it often indicates investor confidence in the market, suggesting that they believe future corporate earnings will improve. This scenario reflects strong economic performance, as a robust economy usually drives higher consumer spending and business investment, reinforcing the upward movement of stock prices.

In contrast, falling stock prices would indicate bearish market conditions, where investors anticipate declining corporate earnings and growth. Stability in stock prices suggests a lack of volatility and may represent consolidation rather than a strong market trend. An economy in recession typically corresponds with declining stock prices and investor pessimism, which opposes the growth expectation found in a bullish market. Therefore, the connection between rising stock prices and a thriving economy defines the essence of a bullish market.