S&P 500 Celebrates Four Years of Bull Market: Up Nearly 120% in Four Years, Year-End Rally Awaits Earnings 'Booster'

According to Zhitong Finance APP, today marks the fourth anniversary of the current S&P 500 bull market. On October 12, 2022, the index hit its final bear market closing low at 3,577 points; four years later, this number has climbed to 7,811 points, an increase of nearly 120%, more than doubling in four years. Resilient consumer spending and labor market, robust earnings growth, and the AI revolution have together fueled this historic rally.

MBI Deep Dives noted that technology deployment is now truly global, with a few companies aggregating demand, and marginal costs approaching zero. This concentrated market capitalization more accurately reflects the profit flows in the market. Hugo Ferrer believes the current market breadth deterioration is caused by higher interest rates, not concerns over slowing growth, thereby reducing the severity of this signal.

However, even at the four-year milestone, market sentiment remains cautious. The MSCI All Country World Index has stalled since reaching a record high in mid-August, with persistent concerns over inflation, bond volatility, and AI spending dampening risk appetite. JPMorgan and Goldman Sachs kicked off the third-quarter earnings season on Tuesday, and S&P 500 earnings are expected to rise 25% year-on-year. Citigroup’s model suggests the proportion of earnings beats this quarter will be higher than last, with technology, healthcare, and mining sectors leading the way.

Leverage Shares analyst Violeta Todorova said this is not a life-or-death moment, but rather a "show me" period, requiring confirmation of the rebound since the bar has been raised. "Normally companies only need to clear a lowered hurdle, but this time they need to jump over a much higher one." Roundhill Financial CEO Dave Mazza added that simply beating expectations and raising guidance is no longer rewarded; this quarter’s hurdle is beating expectations, raising guidance, revising full-year outlook upwards, and demonstrating margin durability.

AI Remains the Core

AI remains the central theme in the market. Market research shows earnings from U.S. AI-related stocks are expected to surge 47% in the third quarter, outperforming all sectors except energy, while the IT sector is expected to account for one-third of total S&P 500 profits this year.

In Asia, companies in Taiwan and South Korea are expected to drive a 66% surge in regional earnings growth. But after the MSCI World Information Technology Index jumped 31% this year and hit new record highs, the bar for further gains is much higher.

Roundhill Financial CEO Dave Mazza said, “Simply beating expectations and raising guidance is no longer rewarded, as this is already anticipated.” “This quarter’s hurdle is: beating expectations, raising guidance, lifting full-year outlook, and demonstrating margin durability.”

Micron Technology’s earnings surpassed expectations, but investor response was lukewarm; Samsung Electronics’ operating profit surged nearly nine-fold but its shares still fell. Increased data center spending by hyperscale cloud providers has boosted outlooks for grid operators and infrastructure providers. However, surging bond yields have raised concerns over financing pace, with SpaceX's credit risk indicators hitting new highs and its bonds weakening in the secondary market.

Broader Growth

Investors are also looking for non-tech sectors to contribute, such as consumption, industrials, and banks—more cyclically sensitive sectors—to drive profit growth.

Emma Moriarty, portfolio manager at CG Asset Management, said, “Watching these non-tech sectors will be especially interesting as barometers of the broader economy.”

Morgan Stanley analysis shows median constituent companies in the Russell 3000 Index are expected to see a 14% earnings increase by 2026, with industrial sector earnings revisions remaining steady and valuations declining.

Analysts stated, “We expect earnings quality, free cash flow, and the breadth of earnings revisions to become key differentiators.”

Meanwhile, in Europe, the “heavy asset, low obsolescence risk” HALO strategy is favored and is seen as less sensitive to AI-driven volatility. In Asia, investors are also seeking assurance that earnings growth can extend beyond the technology sector, especially those with major influence on the AI supply chain.

"The Big Short" Increases Bearish Bets

Consumer-side pressures continue to emerge as rising energy prices feed through to fuel, and higher bond yields push up mortgage, auto loan, and credit card rates. Costco’s paid membership growth fell short of expectations, and H&M saw a significant drop in profit margins.

Bank stocks also came under pressure, with the Stoxx 600 bank sector down about 8% over the past two weeks. JPMorgan has become more cautious on Southeast Asian banks, warning that surging long-term yields may trigger mark-to-market losses.

As market divisions intensify, “the Big Short” Michael Burry has ramped up his bearish positions. He said last Sunday that he had concentrated most of his short bets on put options against the Nasdaq 100 Index (NDX) and the VanEck Semiconductor ETF (SMH), expecting a major top within the next nine months.

His NDX puts expire in April 2027, SMH puts expire in June 2027, both about 20% out-of-the-money. Within SMH, Nvidia accounts for 19.6%, TSMC 9.3%, AMD 5.6%, and Broadcom, Micron, Marvell, and Applied Materials around 5% each. Burry also continues to hold long-term puts on Oracle and Palantir. So far this year, SMH is up more than 67%, Palantir is up 17.6%, and Oracle is down 26.5%.

At the crossroads of the bull market’s fourth anniversary and earnings season, the market is facing a pivotal test: Can AI earnings deliver? Can non-tech sectors step up? Can consumers withstand higher interest rates? If earnings are strong, the year-end rally still has fuel; but if companies fail to clear the heightened bar, Burry’s warning may not be just noise.