Can nothing stop the ‘Teflon Bull’ market?

NEW YORK — The Teflon bull market keeps charging to record highs. Nothing, it seems, can stop it.

This year alone the stock market has survived the recent brush with a U.S. debt default. It has also survived a government shutdown. Tax hikes. Government spending cuts. The threat of war. Terror at the Boston Marathon. A spike in interest rates. Plunging Apple shares. Stock exchange glitches. Fears of a less-friendly Federal Reserve. And a narrow escape from going over the "fiscal cliff."

Nothing bad seems to stick. On Thursday, bolstered by an 11th-hour deal in Congress to avert the nation's first-ever default, the Standard & Poor's 500 index soared to a new all-time closing high of 1733.15, eclipsing its mid-September record. That extends the bull's gain to 156.2% since it began in March 2009 and 21.5% this year alone.

To say the U.S. market has been resilient would be an understatement, says Chris Bouffard, chief investment officer at The Mutual Fund Store. "One by one, all of these worries have gradually been pushed aside," he says.

There are still risks. The debt deal is temporary. Political dysfunction could roil markets again when the new deadlines hit in early 2014. The economy also suffered "unnecessary damage" during the crisis, says President Obama, although the "full scope" is still unclear.

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Any hit to the economy

could have a negative spillover on corporate profitability, a key driver of stock prices.

But even though there's always a chance of things going wrong and the market going down, that doesn't mean long-term investors shouldn't "stay the course," says Bouffard.

For one, the hit to the economy and confidence all but assures that one of the bullish underpinnings of the 4-year old bull — the Fed's easy-money policies — will remain in place even longer. The Fed is now less likely to start dialing! back on its market-friendly bond purchases this year, possibly pushing that back to 2014.

"It means the liquidity playbook remains viable and risk assets like stocks will continue to have a tailwind," says Bouffard.

The chances of a sharp spike in bond yields, another threat to stocks, have also been reduced due to the hit to the economy caused by the nation's debt fight, the belief that the Fed will remain sidelined, and little confidence in Congress actually coming up with a grand bargain to solve the nation's fiscal woes anytime soon, says George Goncalves, head of interest rate strategy at Nomura.

Still, the slow-growth U.S. economy will continue to chug along with help from improving economies in places like Europe, Japan and China, says Bouffard. "The global story," he says, "is getting better."