According to Sam Stovall, chief investment strategist at CFRA Research, “Since WWII, the eight bull markets that celebrated their third year lasted a total of nearly 6.5 years, gaining an average of 213%.” As of October 8, this bull market has already risen 89% from its recent peak, suggesting that it likely has much further to run in terms of both duration and magnitude.
A CFRA review of performance data dating back to 1947 reveals that bull markets typically see an average advance of 12.7% in their fourth year. The most notable fourth-year performance occurred during the 1982-1987 bull market, where the S&P 500 surged by an impressive 29.7%. Conversely, the least favorable fourth-year performance was during the 1949-1956 rally, which saw the index decline by 2.3%.
Oppenheimer’s Ari Wald, who analyzed historical data from bull markets lasting longer than four years, found that stocks generally average a 20% gain in their fourth year. With no traditional warning signs—such as narrowing breadth and defensive leadership—Wald anticipates that the current bull cycle could extend into 2026.
Several factors continue to support this rally. For instance, an artificial intelligence trade is lifting the entire market, alongside the anticipated restart of the Fed’s easing cycle and robust corporate earnings that demonstrate executives are effectively navigating business challenges.
In this favorable environment, CFRA’s equity analysts predict that growth stocks, as well as sectors like communication services and information technology, will continue to thrive in a bull market. However, investors are not without their concerns. Issues such as the potential for an AI “bubble” to burst, an ongoing government shutdown, a weakening labor market, rising inflation, and a ballooning fiscal deficit remain pressing worries.
Additionally, the renewed threat of high tariffs on China from former President Trump, which nearly derailed this bull market in April, caused a 2% drop on Friday. “Even though CFRA believes the bull market has a good chance of celebrating its fourth birthday, history suggests it may be a volatile one,” Stovall noted.
