The bull market in U.S. equities reaches its four-year anniversary next week—a milestone worth examining because extended rallies of this duration have historically continued, though not without volatility.
Since October 2022, the market has absorbed significant economic headwinds: higher interest rates, banking sector stress, and persistent geopolitical risks. That the S&P 500 and Nasdaq have powered through suggests underlying earnings power remains intact. The index has priced in a soft landing scenario—slower growth without recession—and that case has held.
Bull markets lasting four years or longer typically reflect one of two conditions: either corporate fundamentals remain strong enough to justify valuations, or the market has priced in multiple years of future growth and is now waiting for earnings to catch up. We are in the second camp. Current valuations assume peak profit margins and sustained AI-driven productivity gains. That's not inherently wrong, but it leaves little room for disappointment.
The key catalysts to watch: third-quarter earnings season will show whether companies can maintain margins despite wage pressure and cooling demand. The Federal Reserve's December meeting and forward guidance on rate cuts will signal whether the soft-landing thesis holds. If either disappoints, the four-year run faces a test.
For equity-heavy portfolios, this is not the moment to become complacent. History shows bull markets do persist at the four-year mark—but they do so on the back of demonstrated earnings growth, not just multiple expansion. Watch whether corporate guidance justifies current valuations.
