The bull market for US stocks continues its strong march as it approaches its fourth anniversary, driven by the engine of spending on artificial intelligence, which boosts corporate profits and economic growth.
The Standard & Poor's 500 index is trading near record levels, ahead of October 12, which marks four years since the benchmark index closed at its lowest level in the current session, indicating the beginning of the latest rise in the market, according to Reuters.
The very strong growth in corporate profits, supported by spending on expanding artificial intelligence and solid economic conditions, contributed to driving the final phase of the market’s rise, and is a major reason for investors’ optimism about the coming quarters.
But risks still loom on the horizon even though the index continues to rise, as the Federal Reserve’s raising of interest rates and the sharp rise in US Treasury bond yields are two factors that may limit the momentum of stocks. Markets may also witness fluctuations as the US midterm elections scheduled for next month approach. The market's reliance on artificial intelligence is also a source of concern, as markets may meet any indications of a weakening of this trend with harsh penalties.
“AI is the defining characteristic of this bull market,” said Anthony Saglimbini, chief market strategist at Ameriprise. “I think what we are seeing four years into the bull market is that the easy gains associated with artificial intelligence have been achieved... As this bull market progresses, companies, especially technology companies, will be under increasing pressure to prove that the spending they are making today will actually translate into profits.”
The current bullish wave is at an average level
In terms of the lifespan of bull markets, the current wave can be classified as mid-life. The recent rise in the Standard & Poor's 500 index is the eighth longest in terms of duration among emerging markets since World War II, according to Ryan Detrick, chief market strategist at the Carson Group.
Although stock experts differ on the definition of a bull market, the common definition is that the market has risen by at least 20 percent, after declining by at least 20 percent from a previous peak.
The current bullish wave achieved gains amounting to 117 percent, making it the sixth best performing bull market since World War II.
“Four years is by no means a reason to worry about a bull market,” said Mark Hackett, chief market strategist at Nationwide. “Bull markets don’t end just because they get old, they end because they get sick.”
Technology and artificial intelligence are at the heart of the rising wave
Artificial intelligence dominated the latest wave of growth in the market, as the launch of “GBT Chat” came about a month after its beginning. American companies are recording tremendous growth in profits, with the profits of Standard & Poor's 500 companies expected to rise by more than 35 percent this year, driven by capital spending by giant technology companies, known as "hyperscalers", to build data centers.
Oxford Economics estimates that about a third of the recently recorded US economic growth is due to artificial intelligence, including the net impact of direct investments supporting the expansion of artificial intelligence infrastructure, as well as the contribution of rising investor wealth as a result of stock market gains in enhancing consumer spending.
“We are seeing the impact of artificial intelligence on the economy and corporate profits,” Saglimbini said.
Among the eleven sectors included in the Standard & Poor's 500 index, only the technology and communications services sectors, which include the giant companies in the field of artificial intelligence, achieved gains greater than those of the index itself during the rising wave.
The market value of Nvidia, whose chips dedicated to artificial intelligence made it a prominent symbol of this technological era, jumped to $5.8 trillion, compared to $286 billion on October 12, 2022. The company has become the largest in the world in terms of market value. The United States includes 13 companies with a market value each of at least a trillion dollars, and all but two of them belong to the technology sector or have significant exposure to artificial intelligence.
Concentration risks increase as technology dominates
Gains in giant technology and artificial intelligence stocks give these stocks greater influence over major stock indices, but they also make the market more concentrated in a limited number of companies. The share of the ten largest companies in the Standard & Poor's 500 index rose to about 40 percent, compared to about 28 percent in October 2022, according to J.P. Morgan Asset Management.
“This reflects strong economic fundamentals and superior earnings growth, but it also involves some risks,” said Angelo Corkavas, chief global investment strategist at Edward Jones. Concentration risk lies in the fact that if the prevailing trend loses its attractiveness, investment portfolios may be affected to a greater extent than usual.”
Another risk is represented by the Federal Reserve’s recent shift towards raising interest rates, as part of the US central bank’s efforts to reduce high inflation. Tighter monetary policy could slow the economy, perhaps sharply. Indeed, the recent bear market, which took the market to its lowest levels in October 2022, coincided with a sharp cycle of interest rate hikes.
Interest increases also contribute to the significant rise in Treasury yields. The yield on benchmark ten-year bonds was hovering around 5.2 percent, after recently reaching its highest level in 24 years.
High yields pose a disadvantage to stocks, including by making bonds more attractive as a competitive investment to stocks.
Korkavas said that Edward Jones still favors increasing the relative weight of stocks in investment portfolios, but its recommendation has become less impulsive than it was previously, pointing to the increasing attractiveness of fixed income tools.
He added: “We still believe that the bull market is not about to end... but we believe that it makes sense to reduce some of the risks in investment portfolios.”
US stock index futures rose slightly on Friday, with oil prices falling due to easing concerns about supplies in the Middle East, while telecom stocks remained under pressure after the SpaceX acquisition of bandwidth raised concerns about competition in the sector.
Oil prices fell after US President Donald Trump said that his country would not attack Iran before the US midterm elections scheduled for next month, which eased fears that the conflict would lead to further disruptions in global energy supplies, according to Reuters.
Brent crude futures fell by 1.2 percent, but remained above $100 per barrel, which is considered an important psychological threshold in the markets.
In the bond market, US Treasury bond yields were characterized by relative stability, as the yield on standard 10-year bonds settled at 5.25 percent, remaining close to its highest level in 24 years, amounting to 5.364 percent, recorded on Wednesday.
The Standard & Poor's 500 and Nasdaq indices, which are dominated by technology company stocks, headed towards achieving weekly gains, despite their decline during the previous two sessions, supported by optimism surrounding the season of announcing third-quarter results, especially in light of the momentum led by the artificial intelligence sector, which pushed the two indices to record levels earlier in the week.
The Dow Jones index of major companies was also heading towards achieving slight weekly gains.
Shares of major growth companies recorded general increases in pre-market trading. “Nvidia” shares rose by 1.6 percent, while “Tesla” and “Amazon” shares rose by about 1 percent each.
SpaceX shares rose by 3.7 percent, after the company specialized in manufacturing rockets and satellites concluded a deal to acquire a portfolio of low-bandwidth spectrum bands covering all parts of the United States, in a move that represents a direct challenge, through space, to the major traditional wireless communications companies in the country.
On the other hand, the shares of telecommunications companies came under severe pressure. T-Mobile US and AT&T shares fell more than 6 percent each, while Verizon shares fell by 5.3 percent.
By 5:54 a.m. EST, Dow Jones mini-futures rose 86 points, or 0.17 percent, and Standard & Poor's 500 mini-futures rose 31.5 points, or 0.4 percent. Nasdaq 100 futures rose by 251 points, or 0.81 percent.
The season for announcing companies' quarterly results is scheduled to accelerate next week, with major banks preparing to reveal their results. Expectations of strong profits have contributed to supporting US stocks during the recent period, despite geopolitical fluctuations and concerns about rising interest rates.
Among the stocks that recorded early gains, Humana's stock rose by 14.5 percent, after US government data showed that 95 percent of the company's members participating in Medicare Advantage health insurance plans for the year 2027 are registered in plans with a rating of 4 stars or more.
On the other hand, Apple shares fell by 1.8 percent, following media reports that the iPhone manufacturer had asked some of its suppliers to reduce production of components for the iPhone 18 Pro and iPhone 18 Pro Max, in light of the rising costs of memory chips and increased prices, which led to a decline in consumer demand.
China intensified measures to support its economy, on Friday, by allocating 550 billion yuan ($82 billion) of unused government debt issuance quotas, with the aim of relieving financial pressures on local governments and accelerating investment in infrastructure, in the latest attempt to boost economic activity and ensure achieving the annual growth target of between 4.5 and 5 percent.
The move coincided with the People's Bank of China's announcement to increase its net purchases of government bonds during September, and the Ministry of Finance's pledge to expand domestic demand and improve the efficiency of spending on technological innovation. Beijing is also preparing to resume refined fuel exports after a temporary halt during the National Day holiday, in a move that may provide some supplies to Asian markets facing a shortage of oil derivatives.
These decisions reflect a coordinated move at the level of fiscal policy, monetary liquidity, and supply management, at a time when the second largest economy in the world faces continued weakness in consumption and investment, and a long-term real estate crisis, despite the strength of exports and sectors related to advanced technology.
$82 billion to support the local economy
The Chinese Ministry of Finance announced the distribution of 550 billion yuan of unused government debt shares, of which 300 billion yuan will be allocated to support the daily operations of governments at the levels of sub-provinces and administrative regions.
The remaining value, amounting to 250 billion yuan, will be directed to infrastructure projects, especially projects currently being implemented, with attention given to the economically strongest regions capable of converting financing into tangible investment activity.
This distribution aims to address two simultaneous problems: The first is pressure on the financial resources of local governments, and the second is the slowdown in investment, which constitutes one of the traditional engines of Chinese growth.
Local authorities are facing difficulties in financing their obligations as a result of the continuing real estate sector crisis, which has weakened land-related revenues, in addition to the accumulated burdens on debt and spending on public services.
Directing part of the funding to core government operations would ease liquidity pressures, while financing existing infrastructure projects could help accelerate implementation and avoid faltering investments that have already begun.
The move comes after the Chinese State Council pledged, last month, to intensify counter-cyclical economic support, in the face of increasing pressures on domestic activity.
Beijing had used untapped debt quotas to boost spending towards the end of the past two years, but the amount announced this year exceeds similar allocations in 2024 and 2025, indicating a widening scope of financial intervention.
Slowing demand threatens growth target
The need for stimulus measures increased after the Chinese economy lost some of its momentum after the first quarter of the year, with domestic demand continuing to weaken and real estate investment declining.
Although the advanced technology sectors and industrial exports benefited from global demand, these drivers were not enough to compensate for the slowdown in the traditional sectors of the economy.
This discrepancy reflects a structural challenge facing decision makers. Exports and technology can support industrial production, but sustainable growth requires a broader improvement in household spending and corporate investment.
In a report on the performance of fiscal policy during the first half of 2026, the Ministry of Finance pledged to pursue a more active fiscal policy, work to expand domestic demand and deepen financial reforms.
She also stressed the need to raise the efficiency of investments directed to scientific and technological innovation, indicating the continued priority of advanced sectors within the Chinese growth strategy.
Here, the challenge facing Beijing in distributing resources between supporting consumption in the short term and financing investments that raise productivity and competitiveness in the long term is highlighted. Increasing infrastructure spending may provide rapid support for economic activity, but its sustainable impact depends on the economic feasibility of the projects and their ability to achieve returns that exceed the cost of financing them.
The central bank enhances liquidity
In parallel with the fiscal move, the People's Bank of China announced that it carried out net purchases of government bonds worth 100 billion yuan ($14.94 billion) during September, via open market operations.
The amount represents double the net purchases recorded in August, amounting to 50 billion yuan, reflecting increased liquidity support in the financial system.
Government bond purchases can help improve liquidity conditions and relieve some pressure on the debt market, at a time when the authorities are preparing to increase the use of available borrowing quotas.
But the impact of these measures on the real economy will depend on the extent to which liquidity is transferred to investment and spending, and not only on the availability of funds within the banking system.
China faces the challenge that low financing costs or abundant liquidity do not necessarily guarantee a recovery in credit demand, as long as households and companies remain cautious about their income prospects and return on investment.
Hence, the combination of direct fiscal spending and the provision of liquidity may be more effective than relying on monetary policy alone.
Stimulus effectiveness test
The measures announced on Friday reveal the widening scope of the Chinese authorities’ response to the economic slowdown, by supporting local government budgets, accelerating investment, providing liquidity, and managing exports of petroleum products.
But the success of the package will depend on its ability to address weak domestic demand, and not just improve financing conditions or complete existing projects.
The real estate crisis remains a pressure on household confidence and local government resources, while continued reliance on government investment raises questions about the efficiency of capital allocation and debt sustainability.
On the other hand, the growth of exports and advanced technology provides a support base for the economy, but it does not eliminate the need for a recovery in private consumption and domestic investment.
As the end of the year approaches, investors will focus on the speed of utilization of new debt shares, the extent of improvement in domestic spending, and the impact of the central bank’s bond purchases on credit conditions.
Beijing is betting that a combination of more active fiscal policy, monetary liquidity, and targeted support for productive sectors will help it achieve its annual growth target. However, the real test will remain in the ability of these measures to transform government support into a broader and more sustainable economic recovery.
