AI-centered US stock bull market nears four-year anniversary

The US bull market has been thriving as it marks its four-year anniversary, fueled by a spending engine centered around artificial intelligence (AI). The S&P 500 is trading at record highs, with the index's closing low for this cycle signaling the start of the latest bull run. Strong corporate profit growth, driven by AI expansion and a robust economic backdrop, has contributed to the market's rally and investor optimism for the future.

However, risks persist, including the Federal Reserve's interest rate hikes and rising US Treasury yields, which could dampen equity momentum, and market volatility ahead of the upcoming US midterm elections. The AI theme is central to this bull market, with AI spending propelling corporate profits and economic growth. This bull market, the eighth-longest since World War Two, has gained 117%, making it the sixth-best-performing bull market during that period.

Despite the market's dependence on AI, concerns arise as any signs of weakness in AI trends could lead to significant punishment. With AI dominating the latest bull run, tech companies, particularly those with significant AI exposure, now make up a larger share of major stock indexes, introducing risks due to the concentration of top companies.