S&P 500 Extends Historic Rally as Market Bulls Take Charge

Wall Street’s bull market gained fresh momentum at the close of a turbulent month, as upbeat corporate earnings outweighed concerns about the rally’s heavy dependence on tech giants. After a brief pause in the S&P 500’s nearly $17 trillion surge, the benchmark index moved higher on optimistic forecasts from Amazon.com Inc. and Apple Inc. Still, the strength wasn’t universal Apple’s gains lost steam as weaker sales in China tempered the upbeat holiday outlook. Meanwhile, bonds steadied after a selloff following the Federal Reserve’s policy meeting, and the dollar advanced.

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October lived up to its reputation for volatility, with investors weighing risks from geopolitical tensions to trade issues, a potential U.S. government shutdown, and stretched valuations. Yet what ultimately prevailed was investor confidence in corporate profitability and growing expectations that future rate cuts will sustain earnings momentum. Mark Hackett of Nationwide described the month as a key test for bullish investors amid shifting headlines on trade, monetary policy, and earnings.

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“Many remain skeptical about how broad the rally really is,” Hackett said. “But this may just be another ‘glass half empty’ argument from bears whose previous doubts have already faded. Most indicators still point to a strong market through year-end.”

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Since its April slump, the S&P 500 has surged nearly 40%, marking its longest monthly winning streak since 2021. The Nasdaq 100 has performed even better, with a seven-month advance the longest in eight years fueled by tech’s robust balance sheets and the ongoing enthusiasm for artificial intelligence. The S&P 500 climbed to roughly 6,840, while the “Magnificent Seven” megacap index gained 1.2%, led by a nearly 10% jump in Amazon shares.

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In the bond market, momentum cooled after Fed Chair Jerome Powell signaled caution about a potential December rate cut, and several officials voiced opposition to easing policy soon. The dollar, meanwhile, wrapped up its strongest month since July.

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Still, investors are questioning whether those year-end gains may already be priced in after one of the S&P 500’s most powerful runs since the 1950s. Following one of the quickest recoveries in market history, the index now trades at about 23 times forward earnings well above its 20-year average. Michael Burry, famed for predicting the 2008 housing crash, posted a cryptic warning that some interpret as cautioning retail traders about excessive market optimism.

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Earnings season remains front and center for equity investors and so far, results have been largely encouraging. Reports from more than 60% of S&P 500 companies are in, with most beating analysts’ expectations. Hackett points out that investors are entering the most seasonally favorable two months of the year, which have historically averaged a 3.3% return since 1950.

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“We’re in the strong fourth quarter stretch, and we’re buying dips,” said Thomas Lee of Fundstrat Global Advisors. “This isn’t just about AI anymore many sectors are showing double-digit growth, proving that U.S. corporations and multinationals are still generating impressive earnings.”

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Flows also remain supportive for equities. Global stock funds attracted $17.2 billion in the week ending Oct. 29, according to Bank of America, citing EPFR data. BofA strategist Michael Hartnett noted that AI-driven leadership in equities “isn’t going anywhere for now.” Mark Haefele of UBS Global Wealth Management echoed that view, saying, “We remain confident that AI-linked stocks will continue powering equity performance. Investors who are underexposed to the theme should consider diversifying into it.”

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Ryan Grabinski of Strategas observed that references to “AI” in corporate earnings calls continue to accelerate. “Any concerns I had about slowing capital expenditure have faded for now, as investment levels remain robust,” he said. Grabinski added that AI enthusiasm is spreading beyond technology, creating opportunities across more sectors and supporting a broader, more balanced market.

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The S&P 500 is up roughly 16% so far this year. Historically, when the index gains more than 10% through October, it tends to finish the year higher, according to Jay Kaeppel of SentimenTrader. “With an 86% historical win rate during a typically strong period, odds look favorable,” he said. “Still, investors should allocate thoughtfully and prepare contingency plans if markets surprise them.”

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With major indexes hovering near record highs and leadership still concentrated in a handful of large-cap names, many investors are asking whether the rally will broaden. Chris Senyek of Wolfe Research believes large caps will likely maintain their lead through year-end, citing ongoing AI-related spending and strong fund inflows.

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“We don’t expect breadth to improve until small and mid-cap earnings show sustained growth,” Senyek said. “For now, the large-cap, tech-driven rally remains firmly in control.”

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Florian Ielpo of Lombard Odier Asset Management agreed, noting that U.S. tech profitability continues to improve showing resilience few anticipated. As growth stocks extended their dominance this week, value shares lost ground, surrendering their earlier advantage.

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While growth stocks trade at a steep premium to value names, Jeremiah Buckley of Janus Henderson Investors said today’s valuations are supported by real fundamentals. “The gap in profitability between growth and value sectors has widened significantly,” he explained. “Since 2002, rising price-to-book ratios have been matched by higher returns on equity unlike during the 2000 tech bubble, when valuations soared without earnings support.” In other words, this time, the growth story rests on stronger ground.

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