It’s been a record-breaking year for the S&P 500 (SPX), with the benchmark index securing 30 new all-time highs since January. AI stocks have driven much of the rally, with companies like Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD) all up by at least 35% year-to-date.
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That’s caused the market to enter a “manic” zone, which occurs when the Bloomberg Intelligence Market Pulse Index reaches a reading of at least 0.6. The indicator measures factors like breadth, stock correlations, and volatility.
Manic Market Signal Persists as S&P 500 Extends Rally
That could be worrisome for the market, as three-month returns following a manic reading tend to be subdued. At the same time, the Market Pulse Index has trended above 0.6 for two consecutive months.
“The market can undoubtedly keep going in a manic condition as it takes a while for it to build the top,” said Bloomberg Intelligence analyst Michael Casper.
When the rally will end remains the big question. The S&P 500 has returned 4.5% during the past month as rate cut momentum and AI optimism have led to animal spirits taking over the market.
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