Two-year Bull Market in US Stocks: S&P 500 Surges Over 60%, Expected to Continue for Another 22 Months

According to the VESYNC Financial APP, Wall Street is celebrating the two-year anniversary of this bull market, with the S&P 500 index rebounding over 60% from the bear market low. Despite the significant impact of the COVID-19 pandemic and the escalation of the Russia-Ukraine conflict at the beginning of 2022, leading to soaring inflation, the index has risen 62.6% since hitting a bottom of 3577.03 on October 12, 2022, closing at a historical high of 5815.03. The main drivers of this bull market include the surge in artificial intelligence (AI) trading, strong performance of large tech stocks, and market optimism about the Federal Reserve's potential achievement of a soft landing for the economy.

JP Morgan recently stated that we have just passed the halfway point of a 46-month midterm bull market, and if this trend continues, investors can expect about another 22 months of growth. Over the past two years, despite significant pullbacks, benchmark indices have recovered and set dozens of new highs, with almost one day out of every five trading days in 2024 setting a new record.

Bespoke Investment Trust pointed out on social media that the S&P 500 index has a change rate of 60% over the past two years, ranking 95th in history.

Figure 1

One of the current questions is: how long can this bull market last? Signs indicate that the market still seems to have enough support, especially after the Federal Reserve's first rate cut in four years and the upward revision of U.S. economic growth expectations.

Data from Dow Jones shows that unless there is a 40% plunge before January, the S&P 500 index will achieve at least a 20% growth for the second consecutive year, a first since 1998. Despite money market fund assets breaking through the $6.5 trillion mark in October, the stock market continues to rise. Veteran strategist Ed Yardeni suggests that if the Federal Reserve continues to lower interest rates, stock prices may further soar.

However, risks such as hurricanes in Florida, escalating conflicts in the Middle East, and the upcoming presidential election are looming for investors. In addition, the expected price-to-earnings ratio of the S&P 500 index has approached the "overvalued" range, jumping from 15 in October 2022 to 21.6, close to 25.5 in 1999.

Nevertheless, stock market valuations no longer seem excessively high. Wall Street believes that a broader market is a healthier market. In the third quarter, the equal-weighted S&P 500 index outperformed the market-cap-weighted index, indicating a weakening influence of the "Big Seven" on the index. Compared to a year ago, 85% of companies in the S&P 500 index are now profitable.

Ryan Detrick, Chief Market Strategist at Carson Group, stated that while it is impossible to accurately predict how long this bull market will last, there is no reason to expect a recession or the end of the bull market in the next 6 to 9 months He added that although the 62.6% increase in the past two years may have surprised many, the bull market typically lasts for over five years, indicating that the current bull market may have even greater growth potential.

In terms of individual stocks, in addition to Tesla, the seven major tech giants have played a key role in this bull market, with their stock prices rising by about 60% since October 12, 2022.

Figure 2