Four Years Into the Bull Market: Can the Rally Continue?

Preface

The current bull market reached its fourth anniversary on Monday, marking a remarkable stretch for US stocks. Since the S&P 500’s closing low on Oct. 12, 2022, the index has climbed nearly 120%, as investors have embraced the commercial promise of artificial intelligence (AI). The enthusiasm has been especially strong for companies supplying the hardware and infrastructure needed to build out the technology. Yet a powerful rally also raises a difficult question: how much room is left to run? Inflation concerns, rising bond yields, a more hawkish Federal Reserve, and weakening market breadth are among the challenges investors are weighing. This article examines the forces behind the advance, the evidence that momentum could persist, and the risks that may shape the market’s next phase.

Lazy bag

The bull market’s four-year advance has been fueled by confidence in AI and a surge in technology shares, with the S&P 500 up nearly 120% from its Oct. 12, 2022 closing low. Nvidia is now valued at roughly $5.5 trillion, while the index recently crossed 7,800. However, rising yields, inflation worries, narrow market leadership, and high earnings expectations complicate the outlook. Historical analysis suggests more gains may be possible before a potential peak, but analysts are watching small-cap performance and market breadth closely. The rally may continue, though investors could need greater selectivity as risks accumulate.

Main Body

The bull market that began after the S&P 500’s closing low on Oct. 12, 2022, marked its fourth anniversary on Monday. Since that low, the index has advanced nearly 120%. The scale of the gain makes this one of the most consequential market runs in recent years, and its character has been strongly shaped by investor expectations for artificial intelligence. Since ChatGPT was released in late 2022, investors have sought exposure to businesses they believe will benefit from AI’s expansion.

Much of that enthusiasm has focused not only on software and services, but also on the infrastructure behind the technology. Companies sometimes described as the AI trade’s “picks and shovels” supply essential components and equipment for building and operating AI systems. Their shares have risen sharply as investors anticipate continuing demand. This has helped make technology a powerful force in the wider market and has raised the stakes for companies whose valuations depend on expectations of future growth.

Nvidia (英伟达) has become the most prominent example of this transformation. Once best known for graphics cards used in high-end video games, it is now a roughly $5.5 trillion company. Nvidia first surpassed a $1 trillion market capitalization in 2023. Micron Technology (美光科技), another company benefiting from demand associated with AI infrastructure, passed a $1 trillion market capitalization for the first time this May. These milestones illustrate how rapidly investor perceptions of technology suppliers have changed as the AI build-out has gathered momentum.

The rally has continued despite a range of worries, including those that emerged in 2026. The S&P 500 topped 7,800 for the first time last week and remains near record levels. A substantial technology weighting has supported the index: about 40% of the broader benchmark is in technology stocks. That concentration can help the index when large technology companies advance, but it also means that the overall market’s performance may depend heavily on a relatively limited group of companies.

After such a strong run, investors are debating whether the advance can continue at a similar pace. Concerns include higher inflation, surging bond yields, and a more hawkish Federal Reserve. These factors can affect both company earnings expectations and the value investors assign to future profits. Higher yields may make bonds more attractive relative to stocks, while persistent inflation can keep borrowing costs elevated and complicate forecasts for corporate costs and consumer demand. The concerns do not necessarily mean a downturn is imminent, but they make the path forward less straightforward.

Historical comparisons offer one way to assess the market’s position. Ari Wald of Oppenheimer said the current bull market is the sixth longest among 24 bull markets dating back to 1932. Based on the data he reviewed, the median time remaining before a cycle reached its peak was 13 months. That observation suggests 2027 could represent the final leg of the current run, although it is not a prediction that the market must peak at a particular time.

Wald also noted that the median fifth-year return was 21%. This historical measure suggests that investors have sometimes seen further gains even after a bull market has already lasted several years. It offers a reason not to assume that the rally is over simply because it is long in the tooth. At the same time, a median return describes past cycles rather than guaranteeing a similar outcome in the present one. The actual direction of markets will depend on economic conditions, corporate results, and investor expectations.

Market breadth is another important consideration. Breadth measures how widely gains or losses are shared across the market, rather than focusing only on the performance of the largest companies. The source of the rally has become narrower, and that may make the overall advance more vulnerable if leading stocks weaken. In September, 75% of S&P 500 stocks closed in negative territory. The threat of higher interest rates had encouraged investors to concentrate in a handful of mega-cap companies instead of spreading investment across a wider range of shares.

Small-cap stocks have been particularly challenged. Wald said he is monitoring the Russell 2000’s test of its 200-day moving average as a way to judge whether the bull market may still have room to run. This focus reflects the broader question of whether participation can improve beyond the largest companies. If smaller stocks and other lagging groups begin to strengthen, that could indicate a healthier, more widely supported market. If they remain weak, leadership may stay concentrated and the rally’s durability may be more difficult to assess.

Wald cautioned against treating relative weakness as an automatic buying opportunity. “In our view, relative weakness remains a warning, not an opportunity, until stronger market conditions can be reestablished,” he wrote. The distinction is important: a lower share price alone does not establish that a stock or market segment has become attractive. Investors may want evidence that conditions are improving before concluding that lagging areas are ready to participate in the advance.

Corporate earnings present another test. The third-quarter reporting season is expected to be strong, but some investors question whether results will be strong enough to lift share prices. Expectations have risen alongside valuations and enthusiasm, particularly in technology. When investor expectations are high, companies may need to deliver more than simply positive results to sustain momentum. Results that are solid but fall short of those elevated expectations could still disappoint the market.

Deutsche Bank strategist Parag Thatte has expressed concern that the rotation into technology may now be overdone. In his view, the risk-reward profile no longer looks favorable. That assessment contrasts with the continuing optimism of investors who see strong fundamentals behind the AI infrastructure build-out. The difference in views underscores the uncertainty at this stage of the cycle: AI-related demand may continue to support earnings, while high expectations could leave some stocks exposed to setbacks.

Despite these risks, the market’s resilience over the past four years reflects confidence in underlying earnings and the potential economic impact of AI. Investors who remain optimistic argue that the build-out is creating meaningful demand for companies able to provide the necessary technology and infrastructure. However, identifying the businesses that will benefit most may become harder as the sector grows and valuations incorporate increasingly ambitious expectations.

Adam Parker, founder of Trivariate Research, described the importance of combining growth with reliable execution. “In order to outperform, investors need a combination of owning stocks that grow fast and don’t miss — which remains our mantra,” he wrote on Sunday. He later added: “We continue to think that the US stock market will perform well.” His comments capture a view that remains constructive while recognizing that stock selection matters. Rather than assuming every company associated with AI will prosper equally, investors may need to focus on businesses that can deliver growth without repeatedly missing expectations.

Overall, the bull market’s fourth anniversary presents two truths at once. The nearly 120% rise in the S&P 500, together with the extraordinary growth of companies tied to AI, shows how powerful investor conviction has been. At the same time, narrow leadership, weak participation among many stocks, high expectations, and macroeconomic concerns are genuine reasons for caution. Historical patterns suggest that further gains may be possible, but they do not remove the uncertainty. The next phase may depend on whether earnings meet expectations and market leadership broadens beyond a small group of technology giants.

Key Insights Table