The current bull market, driven largely by the AI revolution and companies like Nvidia, has reached its four-year anniversary with the S&P 500 up nearly 120%.
However, investors are now grappling with concerns over rising bond yields, inflation, and a hawkish Federal Reserve, raising questions about the rally’s ability to continue into its fifth year amidst weakening market breadth and high expectations for earnings.
Four Years Young: Can the Bull Market Conquer Rising Yields and a Hawkish Fed?
Published: October 12, 2026
The current bull market has officially celebrated its fourth birthday, marking a remarkable period of growth for the S&P 500, which has surged nearly 120% since its low on October 12, 2022. This impressive rally has been significantly fueled by the artificial intelligence revolution, ignited by the release of ChatGPT in late 2022. Investors have eagerly poured into AI-related stocks, especially those providing the foundational "picks and shovels" for this technological transformation.
Nvidia, a company once primarily known for its high-end gaming graphics cards, has become a poster child for the AI boom. Its market capitalization has soared to approximately $5.5 trillion, crossing the $1 trillion mark for the first time in 2023. Other beneficiaries, like Micron Technology, have also seen significant gains, with Micron reaching the $1 trillion market cap milestone in May 2026. These advancements have helped the stock market overcome various challenges, pushing the S&P 500 to new record highs, with technology stocks now comprising about 40% of the broader index.
However, as the bull market enters its fifth year, investors are expressing concerns about its sustainability. The rally faces headwinds from higher bond yields, rising oil prices, and a more hawkish stance from the Federal Reserve. The path forward appears technically challenging, with some analysts noting that the current bull market is the sixth longest since 1932. Historically, the median remaining time before a cycle peaks is around 13 months, suggesting a potential end in 2027. Despite this, the median fifth-year return has still been positive, indicating that further gains may still be possible.
Market breadth has also become a point of concern, with a significant percentage of S&P 500 stocks closing in negative territory in September 2026, as fears of higher interest rates drove investors back to mega-cap companies. Small-cap stocks, in particular, have struggled. Analysts are closely monitoring key technical indicators, such as the Russell 2000's test of its 200-day moving average, to gauge the market's resilience.
Earnings expectations also present a challenge. While the third-quarter reporting season is anticipated to be strong, some analysts question whether the results will be robust enough to justify current stock valuations, given the high expectations. The tech sector, despite its leading role in the rally, is also facing scrutiny. Some strategists believe the rotation into tech may be overextended, with the risk-reward ratio becoming less favorable.
Despite these challenges, optimism persists among many investors. The market's resilience over the past four years is seen as a testament to strong fundamental earnings driven by the AI build-out. However, navigating the market to pick the winning stocks is likely to become more intricate. As Adam Parker, founder of Trivariate Research, noted, outperformance requires owning stocks that grow rapidly and consistently meet expectations. He remains confident in the continued strong performance of the U.S. stock market.
