Highs All Around: Is the Bull Run Just Getting Started?

U.S. equities powered to fresh peaks before July 4, driven by robust earnings, bullish technical signals, and hopes for easing monetary policy.

Yet as investors chase the next big theme—from tokenized real‑world assets to AI‑industrial expansion—extreme sentiment readings and small‑cap froth raise questions about the sustainability of this rally.

Key Takeaways

Record Peaks: $SPX and $NDAQ Composite hit all‑time highs, cementing a classic “V‑shaped” recovery in H1 2025.

Technical Confirmation: Last week’s “golden cross” and earlier MACD “double‑bull” signals support continued upside momentum.

Valuation Comfort: Forward P/E sits ~1.2 σ above its 10‑year mean—lower than January’s 1.5 σ level—thanks to strong EPS growth.

Labor Market Resilience: June’s nonfarm payrolls beat expectations (147 K vs. 111 K) and unemployment fell to 4.1%, cooling rate‑cut bets.

Rising Yields, Steady Disinflation: Wage gains of 0.2% and 74 K private‑sector jobs suggest inflation pressures are easing, keeping long‑term rates in check.

Technical Momentum: What’s Propelling Equities Higher?

Market technicians point to last week’s golden cross—when the 50‑day moving average overtakes the 200‑day—as a powerful bullish omen.

Coupled with dual bullish MACD signals at elevated levels, these indicators suggest that $SPX remains firmly within a major bull phase.

This technical backdrop mirrors the broader V‑shaped rally: deep Q1 jitters over trade policy fears gave way to a robust Q2 surge as markets embraced policy clarity and strong corporate results, fueling broad‑based risk appetite.

Are Valuations Turning Attractive or Risky?

Despite new highs, $SPX ’s forward P/E ratio sits only 1.2 standard deviations above its decade‑long mean—more attractive than January’s 1.5 σ peak. This benign valuation reflects a 13–15% EPS growth across sectors, driven largely by technology leaders.

Cost‑control initiatives at cloud giants and surging AI‑driven revenue have bolstered profits, mitigating bubble concerns unless index levels sprint past 6,900 without commensurate earnings gains.

Investment Trends to Watch

1.Crypto‑Enabled Financial Reform

The GENIUS Act’s stablecoin framework sets the stage for Real‑World Asset (RWA) tokenization—digital proxies for bonds, real estate, and other tangible assets.While $255 billion of stablecoins trade today, JPMorgan projects the market could swell to $5 trillion by 2028. Major banks stand to gain as liquidity providers and custody pioneers.

2.AI Industrial Revolution

$NVDA ’s Blackwell platform has slashed inference costs, sparking a wave of enterprise deployments. OpenAI’s revenue is pegged to surge from $3.7 billion in 2024 to $12.7 billion in 2025—a 243% jump.This AI ecosystem spans semiconductors, data‑center power and cooling, networking hardware, and security, offering diversified avenues for growth capital.

Could Small‑Caps Lose Steam Amid Euphoria?

Bloomberg Intelligence’s sentiment gauge flipped from “panic” in April to “euphoria” in June. Historically, when this metric peaks, the Russell 2000 underperforms $SPX by 178 bps over the next three months, signaling potential small‑cap strain.

Small‑cap firms—often more leveraged and less profitable—flourish in early upcycles but suffer sharp reversals when exuberance wanes. Defensive large‑caps with solid balance sheets and AI or crypto exposure may offer safer ballast.

U.S. equities stand at a pivotal juncture. Strong fundamentals and technicals argue for continued gains, yet exuberant sentiment and frothy small‑cap performance warrant caution.

Savvy investors will balance thematic exposure to AI and blockchain innovation with selective large‑cap positions—and keep a vigilant eye on small‑cap sentiment as the next phase of this bull market unfolds.