The Zhitong Finance App learned that today the S&P 500 Index celebrated the fourth anniversary of this bull market. On October 12, 2022, the index hit the final closing low of the bear market at 3,577 points; four years later, this figure has climbed to 7811 points, a cumulative increase of nearly 120%, which has more than doubled in four years. Consumer spending and labor market resilience, strong profit growth, and the AI revolution have all created this historic market.
MBI Deep Dives points out that the distribution of technology is now truly global, a few companies aggregate demand, and marginal costs are close to zero. Concentrated market capitalization is more like the market faithfully reflecting profit flow. Hugo Ferrer believes that the current deterioration in market breadth is due to higher interest rates rather than concerns about slowing growth, thereby reducing the severity of this signal.
However, at the fourth anniversary, market sentiment was not easy. The MSCI Global National Index has stagnated since setting records in mid-August, and concerns about inflation, bond volatility, and AI spending continue to weigh on risk appetite. J.P. Morgan Chase and Goldman Sachs kicked off the third quarter earnings season on Tuesday. The S&P 500 component earnings are expected to increase 25% year over year. The Citigroup model shows that the ratio of exceeding expectations this quarter will be higher than the previous quarter, with the technology, healthcare and mining sectors leading the way.
Leverage Shares analyst Violeta Todorova said that this is not a matter of life or death, but it is a “prove it to me” moment, and the rebound needs to be confirmed because the threshold has already been raised. “Usually companies only need to cross a lowered threshold; this time they have to skip a higher one.” Dave Mazza, CEO of Roundhill Financial, said that only exceeding expectations and increasing guidance will no longer pay off. The threshold for this quarter is to exceed expectations, raise guidance, increase full-year guidance, and demonstrate the durability of profit margins.
AI is still the core
AI is still the core main line of the market. According to market research data, the profit of US AI-related stocks is expected to surge 47% in the third quarter, surpassing all sectors except energy. The IT sector is expected to account for one-third of S&P 500's total profit this year.
On the Asian side, Taiwanese and South Korean companies are expected to drive a 66% surge in regional profit growth. However, after the MSCI World Information Technology Index rose 31% and reached a record high this year, the threshold for further growth is already very high.
Dave Mazza, CEO of Roundhill Financial, said, “Simply exceeding expectations and raising guidance will no longer pay off, because this was to be expected.” “The threshold for this quarter is: exceed expectations, raise guidance, improve full-year guidance, and demonstrate the sustainability of profit margins.”
Micron Technology's performance exceeded expectations, but investors reacted lackluster. Samsung Electronics' stock price fell even after its operating profit surged nearly nine times. Data center spending by hyperscale cloud vendors is boosting the prospects for grid operators and infrastructure providers. However, soaring bond yields raised concerns about the pace of financing. SpaceX's credit risk index hit a new high, and its bonds weakened in the secondary market.
Broader growth
Investors are also looking for proof that non-tech sectors can take over, such as proof that broader cyclic-sensitive sectors such as consumption, industry, and banking are also contributing to profit growth.
Emma Moriarty, portfolio manager at CG Asset Management, said, “It will be particularly interesting to observe the performance of these non-tech sectors and can serve as a barometer of the broader economy.”
According to Morgan Stanley's analysis, the profit of the median constituent stock of the Russell 3000 Index is expected to increase 14% in 2026, with steady profit revisions and declining valuations in the industrial sector.
Analysts said, “We expect the quality of earnings, free cash flow, and breadth of revisions to be key differentiators.”
Meanwhile, in the European market, HALO (“heavy assets, low elimination risk”) strategy of “heavy assets and low risk of elimination” is popular and is seen as less affected by AI fluctuations. In Asia, investors are also seeking assurances that profit growth can extend beyond the technology sector, which has a significant impact on the AI supply chain.
“Big bears” are becoming more bearish
Consumer pressure continues to show, with rising energy prices leading to fuel, and rising bond yields driving up interest rates on mortgages, car loans, and credit cards. Costco's paid membership growth fell short of expectations, and H&M's profit margins declined significantly.
Bank stocks are also under pressure. The Stoxx 600 banking sector has fallen by about 8% in the past two weeks. J.P. Morgan Chase is becoming more cautious about banks in Southeast Asia, warning that a sharp rise in long-term yields may cause losses in terms of market value.
At a time when market differences are intensifying, the “big bear” Michael Berry is even more bearish. He said on Sunday that most of his short positions have been concentrated in bearish options on the Nasdaq 100 Index (NDX) and Vaneck Semiconductor ETF (SMH), which are expected to see a significant top in the next nine months.
Its NDX put options expire in April 2027 and SMH put options expire in June 2027, all about 20% off price. Of SMH, Nvidia accounts for 19.6%, TSMC for 9.3%, AMD for 5.6%, and Broadcom, Micron, Mywell, and Applied Materials each about 5%. Bury also continues to hold long-term put options on Oracle and Palantir. Since this year, SMH has risen more than 67%, Palantir has risen 17.6%, and Oracle has declined 26.5%.
At the intersection of the fourth year of the bull market and the earnings season, the market is facing key tests: whether AI profits can be realized, whether the non-tech sector can take over, and whether consumers can handle high interest rates. If financial reports are strong, there is still fuel for the year-end rebound; if corporate profits fail to cross the market's rising threshold, Bury's alarm may be more than just noise.