The Wall Street bull market got a fresh boost at the end of a month marked by volatility, as optimism over corporate profits overcame fears of concentrated gains in giant tech stocks. After a temporary pause in the rise of the Standard & Poor’s 500 (S&P 500), which added nearly $17 trillion to the market value, the index rose with support from strong expectations for Amazon and Apple. Not all major company stocks posted gains on Friday, however, as Apple’s stock momentum waned following a decline in its sales in China, which limited enthusiasm for the upcoming holiday season. Bonds stabilized after a wave of selling that followed the Federal Reserve meeting, while the dollar rose. Confidence Test Traders faced complex factors in October ranging from geopolitical and trade risks to the US government shutdown and high stock valuations. But confidence in American companies and the bet on lower interest rates continue to fuel the momentum. Nationwide’s Mark Hackett said the month tested the strength of investor optimism amid trade, monetary policy and earnings news, adding: “There is growing skepticism about the extent of the equity rally, but many see it as just another argument from pessimists whose previous justifications have mostly faded. Most indicators continue to support a strong market through the end of the year.” The “S&P 500” has risen 40% since April. Since the April declines, the Standard & Poor’s 500 index has rallied about 40%, recording the longest streak of monthly gains since 2021. As for the “Nasdaq 100” index, which rose for 7 consecutive months, it achieved the longest streak of gains in eight years, supported by the strength of companies and optimism of investors. artificial intelligence. The Standard & Poor’s 500 rose to about 6,840 points, and the “Big Seven” index rose 1.2% on Friday, while Amazon shares rose about 10%. Fed tends to hold back on rate cuts Bond market gains stalled in October after Federal Reserve Chairman Jerome Powell played down the possibility of a December rate cut, and some officials signaled they did not support a rate cut this week. The dollar recorded its best monthly performance since July. Oil gains eased on Friday after US President Donald Trump denied he was considering launching a military attack on Venezuela. Trump: I have not made a decision to launch strikes on Venezuela. Number of rising stocks Despite the general positive atmosphere for stocks, fears have emerged about the small number of stocks participating in the rally, which could threaten its continuity in the short term. “The widening gap in participation in the market rally suggests that only some stocks are benefiting from the gains in the current period, while others are being left empty-handed,” said Piper Sandler’s Craig Johnson. He added that the best risk and return opportunities lie in buying on dips within the current bullish cycle. High valuation and bubble fears November historically marks the start of the best six months for US stocks all year, but the question is whether year-end gains have already been priced in after one of the S&P 500’s longest bull runs since the 1950s. How is the AI ​​stock boom responding? After one of the fastest recovery periods in the history of markets, the index trades at 23 times expected earnings, which is well above the average of the past two decades. In a warning sign, investor Michael Berry, previously known for betting against the US housing market, posted a cryptic tweet saying: “Sometimes we see bubbles, sometimes something can be done about them, and sometimes the only winning move is not to participate.” Strong seasonal performance for US stocks. Despite this, earnings results remain the focus of investors’ attention, as more than 60% of Standard & Poor’s 500 companies reported their results, and most of them exceeded estimates. Hackett noted that the market is now entering its seasonal best two months of the year, with the average return during the last two months of the year reaching 3.3% since 1950. “We are in the seasonally strongest quarter, so we are seizing opportunities to buy on dips,” said Thomas Lee of Fundstrat Global Advisors. “There are many sectors recording growth of more than 10%, which proves that the story is not only about artificial intelligence, but about the ability of companies that are American and multinational countries to achieve strong profits.” Flows remain supportive of stocks, as global stocks attracted $17.2 billion in the week ended Oct. 29, according to Bank of America data. Analyst Michael Hartnett said the lead in artificial intelligence stocks “will not go down right now.” Artificial intelligence stocks are taking the wheel of the market. Mark Haefele of UBS Global Wealth Management said: “We reaffirm our belief that artificial intelligence companies will lead stock performance in the coming period, and accordingly recommend that investors add positions through various strategies.” Why are fears of a trillion-dollar artificial intelligence bubble rising? Ryan Grabinski of Strategas noted that the word “AI” is increasingly appearing in corporate speech, adding that his previous concerns about a slowdown in investment spending have “faded” and that “investment activity remains strong for at least another quarter,” noting that “AI spending is now expanding into sectors beyond technology, creating broader opportunities and improving market diversification.” The Standard & Poor’s 500 index has risen by around 16% since the beginning of the year. According to Jay Keppel of SentimentTrader, gains of more than 10% between January and October have historically paved the way for positive results during the following two months with an 86% success rate. “History points to favorable opportunities, but investors must allocate capital wisely and prepare for the possibility of changing trends and keep up with them,” Keppel said. Focus on bullish stocks With markets hovering near record highs, led by a handful of large stocks, Wolfe Research’s Chris Sniak wonders if the performance will expand to include more stocks. Although the valuations of mid-cap stocks remain at their historical average, the weak growth in their profits in recent years suggests that the leadership of large stocks will continue until the end of the year. “As long as the AI ​​spending story remains a key market driver, and as money continues to flow into larger companies, these stocks will remain favorites,” said Wolf Research’s Chris Sinek. “The market will only widen when there is a sustained improvement in small- and mid-cap fundamentals and earnings.” Growth stocks continue to outperform value stocks. “The bull run driven by technology stocks continues to advance steadily, as markets rise in an increasingly concentrated manner,” said Florian Ilbo of Lombard Odier Asset Management. He added: “The profitability of US technology companies is not only strong, but improving, an indication of flexibility that many did not expect.” He pointed out that the Standard & Poor’s 500 and Nasdaq indexes currently dominate the growth stock category, while value stocks have fallen and lost their superiority since the beginning of the year. Despite the higher valuations of growth stocks compared to value stocks, Jeremiah Buckley of Janus Henderson Investors believes that the situation is different from the bubble of 2000, as current valuations are based on strong fundamentals, as the profitability gap between the growth and value indices has widened in a way that justifies the gap in valuation. He added: “Since 2002, the price-to-book ratio has risen in parallel with the rise in return on equity, whereas in the 2000 bubble, valuations inflated without fundamental support. The situation today is completely different.”