The Stock Market Bull Run is Now 2 Years Old and Shows No Signs of Slowing Down

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Today, the S&P 500 and Dow Jones Industrial Average marked a major milestone, reaching new record highs exactly two years into the current bull market. This rally, which began in October 2022, has continued despite a complex economic backdrop and various market challenges. As the stock market bull run turns two, the question remains: what’s fueling this resilience, and how much longer can it last?

What’s Driving the Stock Market Bull Run?

The strength of the current stock market bull run comes from several factors. Technology stocks have led the way, with companies like Nvidia and Arm Holdings reaching new peaks. Nvidia recently saw a record close, buoyed by strong demand for AI technologies. The tech sector also benefits from investor enthusiasm, with growth stocks like Apple and Microsoft showing gains. Meanwhile, the AI revolution is injecting new energy into tech and suggesting more growth as companies continue adopting technological advancements.

Beyond tech, the overall market environment has been supportive. The Federal Reserve’s rate cuts have lowered borrowing costs, allowing companies to generate strong earnings. With inflation better controlled, consumer spending remains stable, adding to economic resilience. The recent reduction in mortgage rates, now at about 6.6%, has been particularly impactful, boosting consumer confidence and spending in housing markets.

Corporations have also delivered solid earnings. FactSet reports a 7% year-over-year rise in third-quarter earnings, the fifth consecutive quarter of growth. This shows corporate health, reassuring investors that companies can navigate potential economic uncertainties. Sectors like healthcare, financial services, and consumer goods are well-positioned to maintain earnings strength in the coming months.

Analyst Predictions: Can the Stock Market Bull Run Go the Distance?

History suggests that the third year of a bull market can be volatile. According to CFRA Research, all 11 bull markets since 1947 experienced a minimum 5% pullback after hitting their second anniversary. While these corrections are often temporary, they highlight challenges as bull markets mature. Still, a correction doesn’t necessarily signal the end.

Analysts like Sam Stovall note the elevated valuations, with the S&P 500 currently trading at 25 times earnings—a level not seen since World War II. High valuations can signal potential headwinds, but Wall Street remains optimistic. Goldman Sachs raised its year-end target for the S&P 500 to 6,000, with more gains projected in 2025 as earnings grow. BMO Capital Markets raised its own forecast, suggesting the S&P 500 could reach 6,100 by year’s end.

With the next earnings season shedding light on corporate health, many analysts see this as a pivotal moment. Earnings growth remains strong, with projections over 10% for 2024 and near 15% for 2025. If these projections hold, they could support an extended bull market. Economic indicators such as job growth and stable consumer spending reinforce a soft landing scenario, rather than the feared recession.

Stock Market Bull Run Risks and Rewards for Investors

As the stock market bull run progresses into its third year, the potential for growth is evident, but caution is warranted. While tech stocks and strong earnings drive much of the enthusiasm, market watchers are mindful of risks. Factors like high valuations and external geopolitical tensions could trigger volatility. However, the fundamental drivers remain strong, and some believe this bull market could still have room to run.

Geopolitical tensions, particularly in the Middle East, present external risks that could influence market volatility. Additionally, shifts in U.S. domestic policy or unexpected Fed rate changes could affect investor sentiment. For investors, the question is not only how long the bull market will last but how best to navigate it. Diversifying portfolios to include sectors with stable earnings, such as healthcare or consumer goods, could balance exposure while capitalizing on growth.

With the  stock market bull run showing few signs of slowing, investors might consider whether their portfolios are aligned with a market breaking records. Whether this bull market will defy expectations remains to be seen—but for now, it’s a historic ride.

Have you capitalized on the bull market? How long do you expect the current stock market bull run to continue? Tell us your fearless forecast! 

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