Stock bull market nears 4-year anniversary driven by AI spending but there are looming risks
The US bull market is going strong as it nears its four-year anniversary, driven by an AI spending engine that is propelling corporate profits and economic growth.The S&P 500 is trading around record-high levels ahead of Oct.12, which will mark four years since the benchmark stock index’s closing low for this cycle — signaling the start of the latest bull run.Sizzling corporate profit growth — lifted by spending on the AI expansion and a solid economic backdrop — has helped drive the latest leg of the market’s rally and is a primary reason for investor optimism in coming quarters.But even as the index climbs, risks loom.
The Federal Reserve’s interest rate hikes and spiking US Treasury yields both provide obstacles that could sap the momentum for equities.Markets could be volatile heading into next month’s US midterm elections.The market’s dependence on AI also presents a worry, with any hints of weakness in the trend possibly met with severe punishment.“The AI theme is the defining feature of this bull market,” said Anthony Saglimbene, chief market strategist at Ameriprise.
“What you’re seeing in terms of the bull market four years in is, I think, the easy money around AI has been made … as we get further into this bull market, there is just going to be more pressure on especially technology companies to prove that the spending that they’re doing today is actually going to translate into the profits.”As bull markets go, the current one could be classified as middle-aged.The S&P 500’s latest run ranks as the eighth-longest bull market since World War Two, according to Ryan Detrick, chief market strategist at Carson Group.While stock experts differ on defining a bull market, a common definition is a gain of at least 20% that has followed a decline of at least 20% from a peak.The current bull run has tallied a gain of 117%, which is the sixth-best-performing bull market since World War Two.“Four years is not, by any stretch...