Bull market check-in: Key signals to watch

Key takeaways

• Bull markets haven’t ended simply because someone said they would. They’ve typically ended when the conditions that supported them began to deteriorate.
• Inflation appears to be cooling, the Federal Reserve sounded less inclined to tighten, earnings growth remained healthy, and market leadership has broadened.
• What typically has ended bull markets — significant earnings misses, falling earnings revisions, tightening liquidity, and restrictive monetary policy — don’t appear to be happening.

This has been a spectacular bull market, notwithstanding the recent sell-off in the semiconductor trade.¹ Stocks pushed higher this year² despite geopolitical tensions, rising energy prices,³ and a steady stream of prognostications that the rally had been nearing its end. Against that backdrop, it was hardly surprising to hear JPMorgan CEO Jamie Dimon describe the current environment as “close to as good as it gets” in this quarter’s earnings report.⁴ For large financial institutions, the backdrop has been exceptionally favorable. Capital markets have been open, and initial public offering (IPO) activity has picked up.⁵ Trading volumes have remained healthy.⁶ Wealth management businesses have been benefiting from rising asset values. Dimon is right in my view. It has been a prime operating environment for the banking industry.

Dimon was also quick to add the caveat that it will not last forever. That portion of the quote received considerable attention and could easily be interpreted as an ominous warning. I didn’t take it that way. Saying that good times eventually come to an end is hardly a controversial statement. Bull markets don’t end simply because someone observes that they will. They end when the conditions that support them begin to deteriorate. So what conditions could cause investors to grow more concerned?

What to watch: Inflation, the Fed, and fundamentals

Historically, one answer has been rising inflation accompanied by a Federal Reserve (Fed) that’s actively tightening policy and squeezing credit growth. There was little evidence of that this week. Consumer prices declined last month⁷ as energy prices fell in June,⁸ while producer price inflation came in softer than expected.⁹ Meanwhile, Fed officials struck a relatively dovish tone. New York Fed President John Williams argued that inflation has likely peaked and should move lower over the coming quarters.¹⁰ Perhaps more importantly, Fed Chair Kevin Warsh emphasized that the massive investment being directed toward artificial intelligence (AI) should eventually generate a supply response that boosts productivity and places downward pressure on prices.¹¹ That’s likely not the language of a central bank preparing to aggressively tighten policy.

Another reason investors typically become bearish is when fundamentals begin to erode. There’s no doubt that the AI trade has been entering a more demanding phase. Expectations have risen significantly, and companies that beat estimates aren’t always being rewarded the way they were a year ago. Markets appeared to be transitioning from a period driven largely by earnings surprises to one that may depend more heavily on the durability of future earnings growth. In other words, investors are becoming less impressed by companies exceeding expectations and more focused on whether today’s growth can be sustained.

That transition, however, shouldn’t be mistaken for deterioration. Earnings growth has remained strong across a broad set of sectors.¹² In fact, one of the more encouraging developments has been the improvement in market breadth, with equal-weight indexes outperforming¹³ and leadership expanding beyond the largest technology companies. Financials, industrials, and other cyclical groups continued to contribute to market gains.¹⁴ Just as importantly, there has been little indication of the significant earnings disappointments or broad downward revisions that typically accompany the onset of a bear market.

No warning signs yet

Markets ultimately can become vulnerable when earnings expectations start moving materially lower, and monetary policy becomes restrictive at the same time. We consider that combination a more reliable warning signal than elevated valuations alone. Today, the evidence has pointed in the opposite direction. Inflation appeared to be cooling, the Fed sounded less inclined to tighten, earnings growth remained healthy, and market leadership has broadened. Investors should always keep in mind that no bull market lasts forever. But the ingredients that typically end bull markets, including significant earnings misses, falling revisions, tightening liquidity, and restrictive monetary policy, simply don’t appear to be in place today.

What to watch this week

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Originally Posted July 20, 2026

Footnotes

1. Source: Bloomberg, L.P., July 15, 2026, based on the 269.69% cumulative return of the S&P 500 Index since the 2020 recession-related market trough on March 23, 2020, and the 15.26% decline in the Philadelphia Stock Exchange Semiconductor Index since the peak on June 22, 2026.
2. Source: Bloomberg, L.P., July 15, 2026, based on the 11.30% year-to-date return of the S&P 500 Index.
3. Source: Bloomberg, L.P, July 15, 2026, based on the price per barrel of US West Texas Intermediate Sweet Crude Oil.
4. Source: Yahoo Finance, “JPMorgan notches record quarter as CEO Jamie Dimon calls the banking environment ‘close to as good as it gets,’” July 15, 2026.
5. Sources: University of Florida – Jay Ritter database and Goldman Sachs, as of June 2026 (latest available). IPOs exclude penny stocks, American Depository Receipts, and Special Purpose Acquisition Companies.
6. Source: New York Stock Exchange, July 2026
7. Source: US Bureau of Labor Statistics, June 30, 2026
8. Source: Bloomberg, L.P., July 15, 2026, based on the price per barrel of US West Texas Intermediate Sweet Crude Oil.
9. Source: US Bureau of Labor Statistics, June 30, 2026
10. Source: CNBC, “New York Fed President Williams says inflation has peaked, rates ‘well positioned,’” July 15, 2026.
11. Source: Bloomberg L.P., “Fed’s Warsh Cools Talk that AI Boom Is Spurring Inflation, July 15, 2026.
12. Source: Bloomberg L.P., June 30, 2026, based on the earnings per share of the companies of the S&P 500 Index.
13. Source: Bloomberg L.P., July 15, 2026, based on the 12.08% and 11.30% year-to-date returns of the S&P 500 Equal Weight Index and the S&P 500 Index, respectively.
14. Source: Bloomberg L.P., July 15, 2026, based on the 9.02%, 5.95%, and 8.98% three-month returns of the S&P 500 Financials Sector Index, S&P 500 Industrials Sector Index, and MSCI USA Cyclical Sector Index, respectively.

Important information

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All investing involves risk, including the risk of loss.

Past performance does not guarantee future results.

Investments cannot be made directly in an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

Artificial intelligence (AI) technology companies are sensitive to specific risks such as small markets, business cycle changes, economic growth, technological progress, obsolescence, and regulation. These companies may have limited products, markets, resources, or personnel, making their securities more volatile, especially for smaller start-ups. Rapid technological changes can adversely affect their results. AI companies often rely on patents, copyrights, trademarks, and trade secrets to protect their technology, but there’s no guarantee these protections will be sufficient. Significant research and development (R&D) spending doesn’t ensure product or service success.

A bull market is an environment in which stock prices are rising or are expected to rise.

The Consumer Price Index (CPI) measures the change in consumer prices and is a commonly cited measure of inflation.

Earnings per share (EPS) refers to a company’s total earnings divided by the number of outstanding shares.

Earnings revisions reflect a company’s reassessment of its earnings estimates.

Market breadth is a concept used in technical analysis to gauge the direction of the overall market by examining the number of companies advancing relative to the number of companies declining.

Monetary easing refers to the lowering of interest rates and deposit ratios by central banks.

In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic, and political conditions.

Inflation is the rate at which the general price level for goods and services is increasing.

Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers.

The MSCI USA Cyclical Sector Index tracks large and mid-cap US stocks in industries that do well when the economy is strong. It includes Consumer Discretionary, Communication Services, Financials, Industrials, Information Technology, Materials, and Real Estate.

The Philadelphia Stock Exchange Semiconductor Sector Index is a capitalization-weighted index comprising the 30 largest U.S.-traded companies primarily involved in the design, distribution, manufacture, and sale of semiconductors.

Purchasing Managers’ Indexes (PMI) are based on monthly surveys of companies worldwide and gauge business conditions within the manufacturing and services sectors.

The S&P 500® Equal Weight Index is the equally weighted version of the S&P 500® Index.

The S&P 500® Financials Index GICS  Level 1 Index includes stocks in the S&P 500 Index classified as financial companies based on the Global Industry Classification Standard (GICS) methodology. The index is market-cap weighted.

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

The S&P 500® Industrials Index includes stocks in the S&P 500 Index classified as industrial companies based on the Global Industry Classification Standard methodology. The index is market-cap weighted.

Tightening monetary policy includes actions by a central bank to curb inflation.

West Texas Intermediate (WTI) is a type of light, sweet crude oil that comes from the US.

The opinions referenced above are those of the author as of July 17, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.