The U.S. stock market is approaching the two-year anniversary of its bull market, surpassing many expectations. Since hitting a low of 3,577.03 in October 2022, the S&P 500 has risen by more than 60%. Despite some fluctuations, the overall momentum shows no signs of slowing.
Data shows that the Cboe Volatility Index (VIX) saw a spike during market drops in August and early September, but investor interest in buying on dips helped the stock market rebound swiftly. This performance has led the S&P 500 to possibly achieve more than a 20% increase for two consecutive years, something not seen since 1998.
However, higher valuations and geopolitical tensions, especially the conflict involving Israel and Iran, pose potential risks to the market. As the third-quarter earnings season begins, investors are focused on the earnings reports of major corporations like Microsoft (MSFT, Financial), Alphabet (GOOGL, GOOG), and Nvidia (NVDA). Nvidia's previous report was strong, yet it failed to significantly boost its stock price.
With the U.S. election approaching, traders are also buying hedging tools to guard against potential market volatility due to disputed results. Analysts from Ned Davis Research note that if the current bull market lasts through the weekend, it will become the 13th to reach a two-year mark since World War II. While 7 of these bull markets have successfully entered their third year, predicting future trends remains challenging.
Key factors for the continuation of this bull market include ongoing lower inflation, a successful economic "soft landing" by the Federal Reserve, and sustained earnings growth from major companies. The influence of AI is expected to impact earnings later this year. However, economic uncertainties linger, affecting market predictions.
