The Bull Market Celebrates Third Anniversary. It Has Everything, Except Trust.

The current bull market turns three this week. Only the brave would bet against it reaching four. (ANGELA WEISS/AFP via Getty Images)

Anniversary celebrations usually involve a combination of congratulations, good wishes, and a few words of reflection and thanks.

What they don’t typically include is warnings from outsiders as to how we got here, why we shouldn’t have, and where we’re likely to wind up if we’re not careful. Bull markets, however, get a different sort of reception.

The current vintage, which will celebrate its third anniversary on Sunday, has delivered an 83% return as a new and exciting technology has entered the investment narrative, creating around $27 trillion in market returns. And yet it remains unloved.

Friday’s selloff is a case in point: the suggestion of an escalated trade war between Washington and Beijing pounded stocks—and erased all of the market’s October gains.

Others have been waving warning flags for much of the past two months.

Federal Reserve Chairman Jerome Powell spoke of “fairly high” valuations in U.S. stocks just a few weeks ago, while JPMorgan Chase CEO Jamie Dimon recently revealed that he is worried about a sharp correction.

International Monetary Fund chief Kristalina Georgieva was even more blunt: “Buckle up: uncertainty is the new normal and it is here to stay.”

That is likely true, but if the AI-inspired rally has taught us anything, it is that the old rule that uncertainty stokes a selloff doesn’t seem to apply anymore. This three-year rally has overcome the headwinds of high interest rates, recession warnings, tariff and political uncertainty, and myriad regional conflicts that would have stopped virtually every other bull market dead in its tracks.

And while those experts fuss over valuations and risks, investors and market pros keep seeing ways to make money.

Data from Truist suggest the fourth year of a long bull market generally brings a gain of around 13% for the S&P 500 . That would peg the benchmark at around 7400 points in the autumn of 2026, Barron’s calculates, with a market valuation of around $64 trillion, compared with 6552.5 as of Friday’s close.

But while Lisa Shalett, head of the global investment office at Morgan Stanley Wealth Management, thinks the market still has room to run, its prospects are vulnerable to the force that got it here in the first place.

“It’s hard not to still see the rally as a boom driven by a one-note narrative,” she said in a recent note. “We can try to focus on economic broadening, but this bull still depends on its gen AI foundation.”

That is largely because, for all the concern about the circularity of AI-funding investments of late —the idea that suppliers are funding their customers—the more important interconnection lies between AI and the broader economy.

Overall tech spending was responsible for around two-thirds of the economy’s 1.6% advance over the first half of the year, but according to Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, “the boost to household wealth has probably been more significant.”

Prior to Friday’s market slump, Tombs noted that around 70% of the S&P 500’s advance since the launch of OpenAI’s ChatGPT in November of 2022 is tied to the Magnificent Seven tech stocks. “We estimate that translates into a lift to household wealth held in stocks of about $8.5 trillion,” he said.

AI will need to continue to power economic growth, which will in turn allow companies to generate the earnings needed to justify the market’s historically high valuations. They now trail behind only the peaks reached before the dot-com crash of March 2000.

“Earnings growth remains the north star of this bull market,” said Keith Lerner, chief investment officer at Truist.

“As stocks have climbed, earnings have risen alongside, indicating the rally is grounded in fundamentals, not just sentiment,” he said. “Continued profit resilience will be key for the market to build on existing gains.”

It might even gain a bit of trust along the way.

Write to Martin Baccardax at martin.baccardax@barrons.com