Five Market Signs Pointing to an Ending Wall Street Bull Run
New York, Friday, 7 August 2026.
Rising bond yields and extreme valuations signal that the long-running stock market bull run may be ending, warning institutional investors to prepare for potential multi-year market headwinds.
Market Warning Signs Emerge
Top investment research analysts have highlighted key macroeconomic indicators signaling that the historic bull market may be reaching its final stages in August 2026 [1][2]. Ned Davis Research (NDR) warns that a secular bear market may be approaching, potentially ending a secular bull market that has persisted since 2009 [1][2]. On 2026-08-05, NDR identified macroeconomic warning signs similar to market peaks in 1929 and the early 2000s, noting the US market is “overbought, overowned, and overvalued” [1][2]. Business leaders, corporate Treasurers, and institutional investors are advised to review portfolio allocations and prepare for potential multi-year headwind cycles that could significantly impact corporate capital strategies and overall US economic growth [1][2].
Valuation Extremes and Yield Pressures
Valuation metrics, specifically the cyclically-adjusted real earnings yield and S&P 500 dividend yield, are nearing levels seen prior to the dot-com bubble peak [1][2]. The S&P 500’s cyclically-adjusted real earnings yield and dividend yield would add bearish warnings by reversing with positive year-to-year point changes [1][2]. On 2026-07-30, the 10-year US Treasury yield rose to 4.64%, surpassing the 4.5% psychological threshold [1][2]. The 30-year Treasury yield is currently hovering near 5.18%, creating a yield spread of 0.54 percentage points between the long-term and medium-term government debt instruments [1][2]. NDR states that in a similar secular bear scenario, rising yields would shift the market’s momentum from positive to negative, with record highs no longer attained [1][2].
Sector Rotation and Performance Divergence
Sector rotation is occurring as the iShares US Technology ETF has declined 3% from its recent peak, while the energy sector of the S&P 500 rose 7% between 2026-07-05 and 2026-08-05 [1][2]. Emerging markets are outperforming the US; the iShares MSCI Emerging Markets ETF is up 16% year-to-date (YTD), while the S&P 500 has gained 12% YTD [1][2]. This divergence is consistent with secular bear markets where leadership trends remain consistent with a bear and the biggest stocks weigh down the indexes [1][2]. Tim Hayes, chief global strategist at Ned Davis Research, noted that historical extremes warn that the market is overbought, overowned, and overvalued, describing market conditions before previous secular tops [1][2].
Fiscal Context and Contrarian Views
US government spending reached approximately 22% of GDP in 2025; the federal budget deficit totaled $1.4 trillion through 2026-06-30, marking a 3% year-over-year increase per the Bipartisan Policy Center [1][2]. Conversely, Goldman Sachs analysts wrote that “The market is pricing a more negative fundamental outlook than warranted and expect it to stabilize and resume its upward trend as positioning clears and newsflow corroborates the earnings outlook” [3]. Historical analysis suggests today’s bull market may have more room to run past 5 years, offering a counter-narrative to the bearish warnings [4]. Investors are advised to balance these perspectives while monitoring the extreme valuation metrics that would no longer be tolerated if real economic growth loses momentum [1][2].