🐂 A full bull?

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Take a walk on the cobblestones of Wall Street, and you’ll see a lot of bulls. 

Bulls dot the desks, lobbies and logos of America’s most storied financial institutions. A few blocks away, you’ll even find a big, bronze bull statue, illegally erected after the 1987 market crash by an Italian immigrant.

The bull is the mascot of American finance. The perfect symbol for the pure, unbridled capitalism that is the American stock market. A mark of the many good times in decades past, when stocks climbed in unison and both workers and executives thrived in an economy awash with profits and productivity. 

Whatever the thought of a bull evokes in your mind, body, and spirit…throw it out.

Because this bull market hasn’t been the strong and dominant bull you’re thinking of.

Technically, U.S. stocks have been in a bull market for almost four years. Over that timeframe, the S&P 500 has more than doubled.

Yet only a handful of stocks have contributed to these impressive returns. From 2023 to 2025, less than one-third of all S&P 500 stocks notched returns better than the index itself. 

This bull has been unusually sickly.

Until now.

Something changed around the turn of the calendar. Suddenly, the unloved pockets of global finance – small caps, value-oriented companies that trade more on actual earnings than hopes and dreams, emerging markets – were crushing it.

This year, about half of S&P 500 stocks are beating the index.

And the S&P 500 outside of the Magnificent Seven seems to be outpacing our tech overlords by a mile.

Wall Street experts call this “broadening” – a shift in market leadership that allows a wide set of stocks to drive gains. It’s like a Jenga tower – wouldn’t you feel more confident about placing that block at the tippy top with a sturdy base? Same deal.

You often see market leadership change when economic conditions shift – growth trends reverse, interest rates rise or fall, or an unforeseen event alters the course of history. Maybe all three at once.

Because of this, the stock market is often at its broadest right after an economic crisis. A plunge in activity resets the economy to its factory settings, and the battered stock market turns around all at once.

You can see the broadening trade here, in the chart of outperformers with recessions highlighted.

This is where the notion of a fierce, charging bull comes from. When everybody thinks the world is ending, the market comes back firing on all cylinders.

The U.S. economy has picked up speed recently. Consumer and business spending last quarter may have been the strongest in two years, according to Atlanta Fed estimates. Manufacturing activity is rebounding. Corporate America is casually posting historic profits, with gains across every sector (a rarity!). 

Sure enough – if you look at the top S&P 500 stocks this year, you see a smattering of industrials, banks and real estate. That’s encouraging.

Part of this broadening is from surging oil prices. Energy stocks often rise and fall in tandem with oil, and S&P energy names are up 30%.

There’s an AI-related switcheroo underway, too. The Magnificent Seven may be having an awful year, but semiconductors and hardware stocks have risen to the top. Tech, but a different flavor of tech.

Make no mistake, though. Different stocks may be carrying the market, but this is your regular ol’ skinny bull if you look at day-to-day participation.

This year, only 292 stocks have moved in the same direction as the S&P 500 each day, the lowest average in at least 30 years. A handful of stocks are still pushing the index around, and if you’re an index investor, you’re not benefiting from this full bull as much as you think.

Put all the evidence together, and you could make the case that this bull market is getting stronger. But is this bull as strong as it could be? Nah, not even close. The raging bull dream of all stocks moving higher together may still be out of reach.

So what does this mean for you, reader? Well, what’s worked for most of this hobbled bull may not be working anymore.

The AI trade has changed to favor the tangible builders of the technology. The picks and shovels, if you will. There are still winners in wartime because Wall Street can be callous and the bull doesn’t care for your feelings. Themes seem to be driving a lot of this dissonance.

The broadening trade is real. It’s just…different. 

But hey, this bull has always looked a little different. Interest rates have stayed unusually high, primarily because our interest-rate superheroes at the Federal Reserve have been trying to tame inflation for years. The economy was walloped by generational unaffordability, yet it didn’t crumble.

We never got that factory reset, so this bull wasn’t allowed to breathe as much as those in the past. And from here on out, the name of the game may be staying vigilant and nimble about what you’re actually investing in. 

Thanks for reading!

Callie

Special thanks to Matt Cerminaro for the data help on this newsletter. Subscribe to Chart Kid Matt or check out Exhibit A for more of his greatness