AI-centered US stock bull market nears four-year anniversary
SPY•The S&P 500 is hovering near record highs as the bull market approaches its four-year anniversary on October 12, up 117% since its October 2022 cycle low. AI-related spending has helped drive profit growth, while market concentration and rising Treasury yields are among the risks cited by strategists.
1. Bull market reaches four years
The S&P 500 is trading near record highs ahead of October 12, four years since its closing low for the current cycle. The 117% gain ranks as the sixth-best-performing bull market since World War Two and the run ranks eighth-longest, according to Ryan Detrick of Carson Group.
2. AI drives gains and profits
AI spending and a solid economic backdrop have helped fuel corporate profit growth and the latest leg of the rally. S&P 500 earnings are expected to rise more than 35% this year, while Oxford Economics estimates about one-third of recent US economic growth stems from AI. Technology and communication services are the only S&P 500 sectors to outperform the index during the bull run.
3. Concentration and rates pose risks
The top 10 companies account for about 40% of the S&P 500, up from about 28% in October 2022, according to J.P. Morgan Asset Management. Strategists also cited rate hikes and Treasury yields; the 10-year yield was around 5.2% after recently reaching its highest level in 24 years. One strategist said the firm remains overweight equities but is less aggressive than before.
