S&P 500 Hits Four-Year Bull Milestone as Bond Yields Test AI Rally

Key points

• S&P 500 up 118.4% since Oct 12, 2022 low of 3,577, now at 7,811.
• 10- and 30-year Treasury yields near highest levels in over two decades.
• S&P 500 ended the week up 1.2%, Dow up 0.9%, Nasdaq up 0.6%.
• Historical data shows bull markets averaging 19% gain in their fifth year.
• Market breadth remains narrow, with tech outperforming industrials and staples.

Background

The current rally is driven by AI infrastructure spending and strong corporate profits. Recent archive coverage noted concerns about narrow market participation and rising rate risks, with some analysts defending the bull case despite historic bond yield spikes.

How outlets are covering it

MarketWatch highlights the risk that rising yields could divert capital from stocks to bonds, pressuring valuations. Jordan Rizzuto of GammaRoad Capital Partners warns that higher rates reduce the present value of future cash flows, particularly for AI-driven growth. Conversely, Ryan Detrick of Carson Investment Research points to historical data, noting that bull markets that reach four years often see strong gains in year five. Garrett Melson of Natixis argues that narrow breadth is not a reliable top signal, as laggards often catch up. I/O Fund and Yahoo Finance titles suggest a correction may precede further gains, but their content is largely inaccessible for detailed analysis.

Why it matters

The four-year mark is a critical juncture for the bull market. If yields continue to rise, it could pressure stock valuations and shift investor preferences toward fixed income. However, historical trends and AI-driven earnings growth may sustain the rally, making the next few months pivotal for market direction.

What to watch

Watch for potential shifts in Treasury yields, corporate earnings reports, and market breadth. A resolution to the Iran war could ease oil prices and inflation, potentially lowering rates. Investors should monitor whether laggard sectors catch up to leaders, which could signal broader market participation.