The current bull market has completed four years, with the S&P 500 up nearly 120% from its closing low on October 12, 2022. A fifth year could bring more gains, but investors face a tougher test: the rally is concentrated in technology, while market breadth has weakened and concerns about inflation, bond yields and Federal Reserve policy persist. The anniversary is a milestone, not a guarantee that the advance can continue at the same pace.
AI has powered an exceptional run
Investor enthusiasm for artificial intelligence accelerated after ChatGPT was released in late 2022. Companies supplying the infrastructure behind the technology became major beneficiaries. Nvidia, once best known for graphics cards used in high-end video games, is now valued at roughly $5.5 trillion; it first crossed a $1 trillion market capitalisation in 2023.
Micron Technology has also joined the trillion-dollar club, passing that threshold for the first time in May. The gains in these companies have helped lift the broader market, where technology stocks now account for about 40% of the S&P 500. That concentration means the index’s strength depends heavily on a relatively small group of large technology businesses.
Milestone levels meet familiar risks
The S&P 500 topped 7,800 for the first time last week and remains near record levels. Its climb through uncertainty—including during 2026—has reflected investor confidence in the earnings potential of the AI build-out. But a high index level and a long advance can also raise the bar for companies: results must justify the prices investors already pay.
Inflation worries, rising bond yields and the prospect of a more hawkish Federal Reserve are among the pressures weighing on sentiment. Higher yields can make bonds more appealing relative to shares, while tighter financial conditions can put pressure on valuations. Those risks matter particularly for technology stocks, which have been central to the rally and therefore to the index’s recent performance.
History offers a possibility, not a timetable
Oppenheimer analyst Ari Wald describes the current advance as the sixth-longest bull market among 24 cycles dating back to 1932. His review of those cycles puts the median time from this stage to a peak at 13 months, pointing to 2027 as a possible final leg. That is a historical comparison, not a prediction that the market must turn at a particular date.
The same history leaves room for further gains: Wald said the median return in a bull market’s fifth year was 21%. Investors therefore face competing signals. The market’s age and its strong run make caution understandable, but the historical fifth-year return suggests that a maturing bull market does not automatically mean an immediate end to rising share prices.
Narrow participation is a warning sign
Market breadth has deteriorated as investors have gravitated towards a handful of mega-cap stocks. In September, 75% of S&P 500 companies closed lower, a sign that the index’s headline strength was not shared widely across its constituents. A rally carried by fewer shares can become more vulnerable if its leaders stumble or if investors reassess the prospects for technology.
Small-cap shares have been especially weak. Wald is watching the Russell 2000’s test of its 200-day moving average as a gauge of whether the advance has enough participation to continue. He characterises relative weakness as a warning rather than an opportunity until stronger market conditions return. That makes the small-cap index a useful contrast to the S&P 500’s record-setting headlines.
Earnings and stock selection will matter more
Third-quarter earnings are expected to be strong, but strong results may not be enough to drive prices higher if expectations have already climbed too far. Deutsche Bank strategist Parag Thatte has argued that the rotation into technology has become overdone and that the risk-reward balance is no longer favourable. His concern speaks to the gap between companies delivering solid results and investors demanding results that exceed elevated expectations.
Optimism has not disappeared. Adam Parker, founder of Trivariate Research, said the US market could continue to perform well, while stressing the importance of owning fast-growing companies that do not disappoint. After four years in which AI-related investment helped support the rally, choosing which businesses can turn that spending into durable earnings may become more difficult. The fifth year’s challenge is not simply whether the market rises, but how broadly—and on what earnings—any further gains are built.
Takeaway: The bull market may have room to run, but narrow leadership and demanding expectations make its fifth year a harder test for investors.
Topic guide: Investing: The Complete Guide