Why the bull market may be changing, not ending

The bull market is rotating away from technology rather than ending because gains remain broad and other sectors are taking leadership.

• Nine of the 11 S&P 500 sectors were positive year to date and nine were positive in October, while non-US stocks gained more than 12% over the year.
• AI demand remained strong: Microsoft’s Azure revenue grew 48%, Amazon Web Services grew roughly 39%, and Meta reported better engagement, advertising effectiveness and revenue from its AI investments.
• The main concern is the cost of meeting that demand, with Amazon, Alphabet, Meta, Microsoft and SpaceX expected to spend roughly $803 billion to $828 billion on capital expenditure in 2026, putting pressure on free cash flow and raising scrutiny of returns.
• Falling interest rates and leadership from health care, consumer staples, energy, utilities and real estate indicate that weakness in technology has been offset by broader market participation; these five sectors gained 11.34%, 11.17%, 8.91%, 8.54% and 6.13%, respectively, after the 10-year Treasury yield peaked on October 5.
• The author expects further volatility as investors reassess AI spending, energy prices, inflation and monetary policy, but argues that changing leaders and the market’s ability to absorb weakness are constructive signs.

Takeaway: Investors should distinguish a rotation and repricing of expectations from the end of the bull market, while recognising that the AI investment hurdle and macroeconomic risks remain elevated.