The S&P 500 bull market turns 4 on October 12, marking a historic milestone with the index up approximately 117% from its October 2022 low of 3,577.03 to a record close of 7,818.93. According to Reuters, the current run ranks as the eighth-longest bull market since World War Two, with the S&P 500's latest run being the sixth-best-performing bull market since World War Two. Six of the seven previous runs to reach this age continued higher, though four bear markets later pushed the index below its birthday level. The current run came close to ending in 2025 when the index fell 18.9% on a closing basis, short of the 20% drop that conventionally ends a bull market. Historically, the 1957 run was the shortest-lived after age 4, ending about seven weeks later, while the 1982 and 2002 runs each lasted to about age 5. In contrast, the 2009 run stretched nearly 11 years, and the 1987 run lasted more than 12 years, with the 1987 run about quadrupling and the 2009 run more than doubling after turning 4 years old.
AI has dominated the latest bull run, with the launch of ChatGPT coming about a month after the bull market began, and US companies posting massive profit growth with S&P 500 earnings expected to rise more than 35% this year. According to Reuters, S&P 500 earnings are expected to increase by more than 35% in 2026, supported by strong corporate performance and capital expenditure by major technology companies investing in AI infrastructure. Oxford Economics estimates about one-third of recent US economic growth stems from AI, including the net impact of direct investment to support expansion of AI infrastructure as well as some contribution from the wealth effect from stock market gains lifting consumer spending. Of the 11 S&P 500 sectors, only technology and communication services — which includes megacap AI players Alphabet and Meta Platforms — have posted stronger gains than the index itself during the bull run. The market capitalization of Nvidia — whose AI chips have made the company the poster child of this technological era — has soared to $5.8 trillion from $286 billion on October 12, 2022, becoming the largest company by market value in the world. Thirteen US companies boast market values of at least $1 trillion — all but two either in the tech sector or with significant AI exposure.
Earnings growth, not valuation expansion, is doing the heavy lifting behind the S&P 500's rally, with the index gaining 168% since 2019. According to Investing.com, earnings growth accounts for 137% of that return and dividends for 26%, while multiple expansion has contributed almost nothing (just 5%). This breakdown suggests the market is not overvalued despite often being described as such. The dominance of large technology and AI-linked stocks has helped propel the S&P 500 higher but has also made the benchmark increasingly dependent on a relatively small group of companies. According to Reuters, the 10 largest constituents now account for approximately 40% of the index, up from around 28% in October 2022, according to JPMorgan Asset Management. A key concern is the widening gap between record-setting benchmarks and the lacklustre performance of many individual stocks, with the equal-weighted S&P 500 trailing the market-cap-weighted benchmark by 52 percentage points since October 2022. That is the widest underperformance at this stage of a bull market since at least the 1990s.
The Federal Reserve's recent pivot to rate hikes poses significant risks to the current bull market, as the US central bank seeks to bring down high inflation. According to Reuters, the benchmark 10-year Treasury yield was hovering at around 5.2%, after recently reaching its highest level in 24 years. Rate hikes also factor into the huge jump in Treasury yields, with higher yields posing headwinds for equities, including potentially greater investment competition from bonds. Elevated bond yields remain a major obstacle, with the 10-year Treasury yield climbing as high as 5.34% last week, its highest level since 2002, weighing on rate-sensitive small-cap companies, banks, unprofitable technology firms and businesses with weak balance sheets. The last bear market that led to the low in October 2022 coincided with a sharp rate-hiking cycle, making the Fed's current pivot particularly concerning for market stability. The combination of elevated yields and stretched valuations could leave markets more sensitive to inflation data, Federal Reserve policy signals and changes in corporate earnings expectations.
A bottom-up investment strategy, dynamic sector allocation, and timely cash calls helped deliver strong double-digit returns in 2026, with the portfolio demonstrating resilience in a challenging market environment. According to latest reports, the S&P 500 has reached 27 record closing highs this year despite ongoing concerns over geopolitics, inflation, and Federal Reserve policy uncertainty, with the index up approximately 12% year-to-date through September. Commodities are leading the charge with the Bloomberg Commodities Index outperforming most other asset classes with a total return of 32.9% through the third quarter, while emerging-market stocks (MSCI EM) are up approximately 24% year-to-date, significantly outpacing developed market peers. The performance comes as U.S. and foreign stocks are also posting robust gains, with international developed market stocks (MSCI EAFE) up about 11% year-to-date in U.S. dollar terms, with all 11 S&P 500 sectors posting gains rather than returns being concentrated in a handful of mega-cap technology names.
Markets could be volatile heading into next month's US midterm elections, with the Federal Reserve's interest rate hikes and spiking US Treasury yields both providing obstacles that could sap the momentum for equities. According to Reuters, investors are also preparing for the US midterm elections next month, which could add to uncertainty and market volatility. Despite the risks, market strategists do not consider the bull market's age alone a reason to expect an imminent reversal. The more immediate question is whether earnings growth and economic resilience can continue to justify elevated stock valuations, particularly as AI-related investments become more expensive and expectations rise. With valuations increasingly concentrated in a handful of technology giants, the market may require broader earnings participation and continued economic resilience to sustain its advance. While the bull run has demonstrated considerable strength, investors could face a more demanding environment in which stock selection, valuation discipline and risk management become increasingly important.
