Why the Stock Market's Long Rally Could Have Further to Go
New York, Tuesday, 11 August 2026.
Driven by solid earnings growth rather than wild speculation, the stock market hit a record high of 7,757.64 in August 2026. Historical trends suggest this rally still has substantial room to expand.
Record Highs and Market Momentum
The S&P 500 index closed at a record high of 7,757.64 on August 7, 2026, surpassing the 7,500 level that had been held since May 14, 2026 [1][3]. This milestone marks a significant continuation of the bull market that originated on October 12, 2022, with the index recording a 116.9% gain since its inception [2][5]. As of August 11, 2026, the index remains 3.5% above its 50-day moving average and 9.8% above its 200-day moving average, indicating strong technical momentum [1][3]. Year-to-date performance figures as of August 7, 2026, show the S&P 500 up 13.3%, while the S&P 500 Ex-Mag7 index rose 4.8% [1][3]. The Russell 2000 also reached record highs during the week ending August 7, 2026, signaling broadening participation beyond the largest technology companies [1][3].
Historical Context and Cycle Duration
Analysis comparing historical market cycles shows this current rally ranks fifth among the eight major bull markets observed since 1966 [2][5]. The cycle is now 3.8 years old, effectively entering its 46th month as of August 9, 2026 [4]. Historical data from Carson Investment Research and FactSet indicates the average length of a bull market is 5.6 years, suggesting potential longevity for the current expansion [4]. To match the 2011-18 cycle gain of 167%, the S&P 500 would need to reach 9,536, representing a further increase of 22.924 percent from current levels [2]. Some analysts note that surviving beyond the three-year mark is a strong technical indicator for long-term growth, with previous long-term cycles lasting up to 12.3 years [4].
Earnings Momentum Versus Speculation
Market participants define the current driver as FEMO, or fabulous earnings momentum, distinguishing it from the FOMO-driven meltup of the late 1990s dot-com era [1][5]. S&P 500 forward earnings are $389.90 per share, converging toward the 2027 consensus of $408.83 [1][3]. Quarterly EPS blended growth rates for 2026 are robust, with Q2 showing 46.7% year-over-year growth, attributed partly to mark-to-market capital gains [1][3]. The forward P/E ratio for S&P 500 Growth is 20.2 compared to 18.3 for Value, significantly lower than the Growth index trading above 40.0 during the dot-com era [1][3]. Information Technology sector earnings growth is at 72.9%, while Financials show 142.7% growth, though Health Care shows -6.8% [1][3].
Investor Sentiment and Future Outlook
Sentiment indicators reveal a divergence between institutional and retail investors as of early August 2026. The Investors Intelligence bull-bear ratio spiked to 3.63 for the week of August 9, 2026, exceeding its 2.60 average [1][3]. Conversely, the AAII bull-bear ratio remained at 0.98, below its 1.19 average, indicating caution among retail participants [1][3]. Analysts suggest that bull markets usually die when earnings roll over rather than due to old age, and forward earnings are expected to converge with the 2027 EPS consensus by the end of 2026 [3][4]. While the 2025 tariff selloff previously tested the market with an -18.9% drop on closing prices, the current structure suggests the rally may have room to run further than historical averages imply [2][4].