TLDR:
- S&P 500 bull market is 2 years old, up over 60% since October 2022 low
- Wall Street strategists expect further gains, with some targets above 6,000
- High valuations pose a challenge but are not necessarily a sign of the bull market ending
- Earnings growth and AI impacts expected to drive future gains
- External risks include Middle East tensions and the upcoming US presidential election
The S&P 500 bull market celebrated its second birthday in October 2024, marking a remarkable run that has seen the index gain over 60% since its low point in October 2022. Despite concerns about high valuations and external risks, many Wall Street strategists remain optimistic about the market’s future prospects.
The bull market officially began in June 2023 when the S&P 500 rose 20% from its bear market low. At two years old, this bull run is still relatively young compared to the historical average of 5.5 years. The total return of about 60% also falls short of the typical 180% gain seen in past bull markets, according to research from Carson Group.

Several factors have contributed to the market’s strong performance. The rise of artificial intelligence has fueled enthusiasm for tech stocks, while the US economy has shown surprising resilience in the face of high interest rates. The Federal Reserve’s pivot towards rate cuts has also boosted investor confidence.
Wall Street analysts have recently raised their targets for the S&P 500, with some projecting levels above 6,000 by year-end 2024 or early 2025. BMO Capital Markets raised its year-end target to 6,100, while Goldman Sachs set a 12-month target of 6,300.
However, challenges remain. High valuations pose a potential limit to further gains, with trailing price-to-earnings ratios at levels only seen during the dot-com bubble and in 2021. Charles Schwab senior investment strategist Kevin Gordon noted that these stretched valuations could indicate the bull market is nearing its end.
Yet, strategists caution against using valuations alone to predict market tops. Stocks can trade at expensive levels for extended periods, and a specific catalyst is typically needed to end a bull market. Common triggers include sharp interest rate increases or rising unemployment, neither of which appear imminent.
The focus for continued market gains is likely to shift towards earnings growth. Consensus estimates project earnings to grow nearly 10% in 2024 and almost 15% in 2025. Investors will need to identify sectors with accelerating earnings growth to drive further gains.
Artificial intelligence is expected to play a significant role in future market performance. While the initial AI boom primarily benefited large tech companies, attention may now turn to how AI impacts profitability across a broader range of industries. Citi equity strategist Scott Chronert suggests that for AI to continue driving market gains, “you’ve got to have more companies delivering on the AI promise via margins and profitability metrics.”
External factors also pose risks to the market’s continued ascent. The ongoing conflict in the Middle East has raised geopolitical tensions, with recent missile exchanges between Iran and Israel adding to concerns. The upcoming US presidential election in November 2024 is another source of uncertainty, with a tight race between Kamala Harris and former President Trump potentially leading to legal challenges and market volatility.
Natural disasters, such as the recent hurricanes that caused significant damage in southeastern states, could impact economic growth in affected regions. However, rebuilding efforts may ultimately provide a boost to the overall US economy.
Investors should also keep an eye on potential signs of overheating in specific sectors, particularly in tech stocks that have seen rapid price appreciation. Monitoring indicators such as the Relative Strength Index (RSI) can help identify when stocks or sectors may be overbought and due for a correction.
As the S&P 500 bull market enters its third year, the path forward appears cautiously optimistic. While challenges exist, the combination of expected earnings growth, ongoing AI innovation, and a resilient US economy provide support for further gains.
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