Bull Market Turns Three, More Stocks Have to Join to Keep it Going

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The S&P 500 Index began its current bull run on Oct. 12, 2022, soaring 83% in that time and adding about $28 trillion in market value. While the gain was 88% before Friday’s selloff on President Donald Trump’s threat of a “massive increase” in tariffs on goods from China, the benchmark’s 13% jump over the past 12 months is still twice the average rise in the third year of a bull market, according to CFRA Research.

Of the 13 prior bull markets since World War II, seven completed a fourth year, with an average total gain of 88%. This one has essentially done that in three years, putting the S&P 500’s trailing price-to-earnings ratio at 25 — the highest ever for a bull market in its third year, said Wall Street veteran and CFRA chief investment strategist Sam Stovall.

“I’ve never seen anything like this,” Stovall said.

From here, the tug-of-war between the believers and skeptics faces a fierce debate: Have US stocks rallied too far, too fast?

“It may be a tough 2026 for US stocks because of pricey multiples, tariff and economic concerns, and since next year is a midterm US election year, which usually adds to volatility over policy uncertainty,” Stovall said. “But history says the market isn’t too far over its skis yet and doomed to fail. It just means gains need to rightsize soon.”

Some Wall Street pros worry about wild cards on the horizon. Investors saw what that could look like on Friday when Trump’s tariff comments sent the S&P 500 tumbling to its worst day since April 10 during the first tariff freak out. In addition, there’s the US government shutdown, the path of the Federal Reserve’s interest-rate cuts, and the third-quarter earnings season, which begins Tuesday with big banks like JPMorgan Chase & Co. reporting results.

“Given how quickly the market has advanced, this earnings season may stoke volatility if companies signal any growth worries,” said Louise Goudy Willmering, a partner at Crewe Advisors, whose wealth management firm is adding international shares with cheaper multiples.

One key risk is the concentration of this rally. It has been driven by tech behemoths like Nvidia Corp., which has soared almost 1,500% in the past three years, and Meta Platforms Inc., which has gained more than 450%. But lots of stocks are lagging.