S&P 500 marks four-year bull market anniversary with AI-driven gains
The S&P 500 reached its fourth anniversary in the current bull market on Monday, having climbed nearly 120% from its closing low on October 12, 2022. The rally has been fueled by investor faith in artificial intelligence, with the index topping 7,800 for the first time last week and remaining near record levels. Tech stocks now account for about 40% of the broader index, a heavy allocation that has supported recent gains.
The S&P 500 reached its fourth anniversary in the current bull market on Monday, having climbed nearly 120% from its closing low on October 12, 2022. The rally has been fueled by investor faith in artificial intelligence, with the index topping 7,800 for the first time last week and remaining near record levels. Tech stocks now account for about 40% of the broader index, a heavy allocation that has supported recent gains.
Nvidia, a key beneficiary of the AI build-out, is now a roughly $5.5 trillion company after passing the $1 trillion market cap threshold for the first time in 2023. Micron Technology also crossed the $1 trillion market cap mark for the first time in May. These moves have helped the market overcome concerns, including those in 2026, as investors continue to favor stocks tied to the technology sector.
Despite the strong performance, technical indicators suggest the path forward may be challenging. Ari Wald of Oppenheimer noted that the current bull market is the sixth longest of 24 cycles going back to 1932. Wald’s analysis indicates that the median time remaining before a cycle peaks is 13 months, which implies 2027 could be the final leg of the current run. However, Wald added that the median fifth-year return has historically been 21%, suggesting further gains are possible before any peak is reached.
Market breadth has deteriorated, with 75% of S&P 500 stocks closing in negative territory in September as higher interest rate threats pushed investors into mega-cap companies. Small caps have suffered particularly, and Wald is monitoring the Russell 2000’s test of its 200-day moving average to gauge if the bull market has room to run. Wald described relative weakness as a warning rather than an opportunity until stronger conditions are reestablished.
Earnings expectations also present a hurdle. While third-quarter reporting is expected to be strong, some investors worry results may not be sufficient to lift stock prices given elevated expectations. Parag Thatte, a strategist at Deutsche Bank, wrote that the rotation into tech is now overdone and that the risk-reward profile is no longer favorable. Conversely, Adam Parker, founder of Trivariate Research, maintained that U.S. stock markets will perform well, emphasizing the need for investors to own stocks that grow fast and meet expectations.