Is this the start of a bull run?
Endowus Insights
Join our in-person China & HK Market Outlook event with Abrdn, Allianz Global Investors, and JPMAM. RSVP here

Is this the start of a bull run?

13 Jul
12 Jul
  • US equities are seeing a remarkable run — what’s driving the rally? Is this just a short-lived recovery, or the start of a bull market?
  • Find out what fund managers think about Big Tech’s blistering run, and whether or not it might fizzle out soon.
  • Gain exposure to the world’s most technologically innovative companies with the Endowus Technology Portfolio. To explore Best-In-Class funds from leading global fund managers, check out the Endowus Fund Smart platform.

Is this the start of a bull run?

US stocks have bounced back in recent weeks, returning to what some are calling bull-market territory. This marks an about-turn from the bear market that began in early 2022, which then ended up as equities’ worst year since 2008.

The S&P 500 stock market index — representing major US equities — has roared ahead in 2023, posting consecutive weeks of gains. Year to date, the S&P 500 is up about 16.5%, as of 3 July.

Large-cap technology stocks are leading the share price rally amid optimism around artificial intelligence (AI) and the changing interest rate outlook. Also buoying the equity markets are strong financial results and raised outlooks for some companies. 

Will the Big Tech rally fizzle out soon? Fund managers give their take.


Long-term optimism amid short-term headwinds

Neuberger Berman, June 2023

“Like many, we have been surprised by the strength of US equities in the face of rising interest rates, sticky inflation, a regional banking crisis and persistent geopolitical tension. Mega-cap growth stocks (MEGAs) dominated during the first half of the year, helped along by excess liquidity (soon set to unwind), fortuitous positioning … and giddy exuberance over AI (and the productivity gains it promises).”

“With MEGA valuations still on the rise, we believe we are entering frothier territory, with recent gains being more driven by multiple expansions than by earnings growth. At the same time, experience reminds us that valuations have a way of defying gravity in the glow of transformative technologies and paradigm shifts — and predicting peaks in investor frenzy with precision is a tall order.”

“As the tailwinds that supported the overall economy, and FAANG stocks in particular, continue to fade, we believe the lagged impact of tighter monetary policy is set to intensify. Consequently, we expect US growth to downshift and reconnect with the recessionary track it was on and lead to increasing volatility in the equity market.”


Time to engage more fully

Franklin Templeton, 29 June 2023

“Various observers have noted that the narrow leadership of global equity markets in recent months is unsustainable and warn of trouble ahead. We see things differently. Following consecutive quarters of falling US corporate profits, the outlook for earnings is beginning to brighten. … By early 2024, which is well within the forward-looking timeframe of markets, we expect US corporate profits growth to accelerate to a double-digit clip.”

“The bottom line is that if a US recession occurs — which remains the overwhelming consensus view and hence is to some extent already accounted for in market prices — we believe it is likely to come later and be shallower than its predecessors. Nor is it inconceivable to imagine that the ongoing profits recession may end before an economic recession arrives — if it ever does.”

“Although the S&P 500 Index has risen 12% so far in 2023, the five largest companies have delivered 72% of the index’s price return, while the remaining 495 contributed just 28%. … If this gap holds through year-end, it would be the greatest divergence between the two in a calendar year since 1998.”

Chart: S&P 500 stock index performance shows concentrated market. Chart is of the sum of the five largest S&P 500 weights, as of 9 June 2023. Source: FactSet, Franklin Templeton

“As we look into the second half of the year, we see the potential for widening market breadth as investors gain confidence that we are closer to the end of the rate-tightening cycle and that fundamental earnings risk may be less than feared if economic conditions show signs of stabilisation.”


Engine running, shifting to neutral

Neuberger Berman, July 2023

“... our caution on equity markets has been met with unexpected resilience and a rally in U.S. mega cap tech stocks. We remain fundamentally cautious, but timing is everything: the potential for this resilience to persist leaves us with conflicting signals from a more benign shorter-term outlook and growth risks over the medium term.”


New regime, new opportunities

BlackRock, 3 July 2023

“We are underweight the broad (US equity) market — still our largest portfolio allocation. We don’t think earnings expectations reflect the macro damage we expect. We recognise momentum is strong (in the) near term.”

“US stocks hit 14-month highs after Q1 US data on output and income was revised up. We think activity is holding up thanks to households spending pandemic savings — and persistent inflation as seen in PCE (Personal Consumption Expenditures price index) data may mean policy rates need to go even higher.”


Mid-year review 2023

J.P. Morgan Asset Management

“In the US, the stock market rally was essentially driven by a small number of mega-cap stocks. Eight companies, mainly the mega-cap tech companies, were responsible for over 90% of the gains in the S&P 500 Index in the first five months of the year. Investors had piled into large tech companies with steady profitability amid the softer economic backdrop. The fall in government bond yields also helped justify a higher valuation for these companies. That said, unprofitable companies were still penalised.”

“In the US, current valuations seem consistent with a steady growth environment, which we believe is a little optimistic. We continue to prefer high-quality companies with more resilient earnings amid weakening growth and healthy balance sheets.”


Building a resilient long-term investment portfolio through Endowus

It is impossible to predict how macroeconomic events and the artificial intelligence (AI) exuberance would play out, or to prepare for any consequent implications on your investments.

However, spreading your investments across asset classes and geographies will help with diversifying your risk. With market volatility comes opportunities. If you have a long-term investing horizon, as many of us do, these developments may offer an opportunity through steady, regular investing in diversified and risk-adjusted portfolios.

With digital wealth platform Endowus, you can plan and manage your money — by investing in Best-In-Class funds and globally diversified, intelligent, low-cost funds and portfolios seamlessly.

Gain exposure to the world’s most technologically innovative companies with the Endowus Technology Portfolio. If you prefer to build your own portfolio with single funds from leading global fund managers, explore our Fund Smart platform.

Click here to get started with your investing journey with Endowus today. 

Read more:


Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. 


Whilst Endowus HK Limited (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

No invitation or solicitation

Neither the information, nor any opinion, contained in this article constitutes a promotion, recommendation, solicitation, invitation or offer by Endowus or its affiliates to buy or sell any securities, collective investment schemes or other financial instruments or services, nor shall any such security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This is not intended to be an invitation or offer made to the public to subscribe for any financial product or other transaction.

This advertisement has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

More on this Tag
No items found.
All you need to know about personal finance and investing
Please wait while we are submitting your email...
Thank you! Your submission has been received!
invalid email address

Table of Content