What to expect in the stock market after a three-year bull run

MW What to expect in the stock market after a three-year bull run

By Philip van Doorn

Also: A threat to online sports-betting platforms, AI bubble fears, Medicare enrollment, and advice from the Moneyist

The S&P 500's bull market is nearly three years old. This year, the stock-market rally has broadened, with four sectors outperforming the full index.

A bull market is generally considered to be one that rises by at least 20%, while a bear market is one that declines by 20%. The current bull market for the S&P 500 is nearly three years old. The largest decline for the U.S. stock-market index during this period was 19% from an early-2025 closing high on Feb. 19 through April 8 - with most of that decline taking place after President Trump's "liberation day" tariff announcement on April 2.

The S&P 500 SPX subsequently recovered and resumed its upward climb, for a 2025 return of 15.7% through Thursday. (That and the following returns all include reinvested dividends.) Here are year-to-date and three-year returns for the 11 sectors of the S&P 500. The sectors are sorted by three-year returns, with the full index at the bottom:

   Sector                    2025 total return  Three-year total return 
   Information Technology                25.3%                   178.2% 
   Communication Services                23.2%                   161.0% 
   Industrials                           17.6%                    89.2% 
   Financial                             11.6%                    82.1% 
   Consumer Discretionary                 4.4%                    75.8% 
   Utilities                             22.2%                    56.4% 
   Materials                              8.0%                    36.9% 
   Consumer Staples                       3.5%                    35.2% 
   Real Estate                            3.7%                    32.6% 
   Health Care                            6.3%                    23.9% 
   Energy                                 5.3%                    18.5% 
   S&P 500 Index                         15.7%                    93.4% 
                                                           Source: LSEG

The bolded figures are for sectors whose returns have been higher than those of the full index for either period. This year, four sectors have outperformed the index, with industrials XX:SP500.20 and utilities XX:SP500.55 joining the information-technology XX:SP500.45 and communications-services XX:SP500.50 sectors, which have led over both periods.

MarketWatch's Joseph Adinolfi and Isabel Wang dug into the long history of bull markets and how they have ended, while considering small-cap stocks and other equity classes in this look ahead at what's next for the U.S. bull market.

Another sign of the times: Meme-stock ETF is back from the dead. Its launch coincided with the 2021 market top.

Your index fund's increasing risks

The S&P 500 is weighted by market capitalization, which means that its largest 10 companies now make up 40.6% of the SPDR S&P 500 ETF Trust SPY - the oldest of several large exchange-traded funds that track the large-cap benchmark index by holding all of its stocks.

This is the highest level of concentration for the S&P 500 since at least 1972, according to analysts at Ned Davis Research. Meanwhile, the index is trading at a high forward price-to-earnings ratio relative to long-term average valuation levels.

Here is a look at what it means when high concentration and valuation risks are paired in an index fund, and what you might do about it.

How to buck the beer-drinking trend

Constellation Brands has been the worst stock-market performer this year among the "big three" beer brewers operating in the U.S.

Beer brewers have been worried for some time about pressure on their business from younger drinkers' interest in different types of alcoholic beverages, as well as their growing disinterest in alcohol more generally. Constellation Brands Inc. $(STZ)$, the brewer of Corona and Modelo, has seen its stock decline 34% this year.

But Constellation may have a long-term competitive advantage, as MarketWatch's James Rogers explained.

More from MarketWatch's companies coverage:

-- Tesla just unveiled a cheaper Model Y and Model 3. Why the stock is falling.

-- Tariffs and GLP-1s are keeping people from dining out. An analyst tries to find the positives.

-- Paramount has its eyes on Warner Bros. - but the big question is how to pay for it

-- Delta's stock jumps as travel demand accelerates, leading to record revenue

-- These banks might be next to pair up, says analyst who called the $11 billion Comerica sale

Recession map

The U.S. economy as a whole hasn't slipped into an economic contraction - at least not according to the available data. But 22 out of 50 states are already in recession, according to Moody's Analytics Chief Economist Mark Zandi, who provided this state recession map and discussed his research in an interview with MarketWatch's Greg Robb.

As the AI spending wave rolls on, 'something about this does seem to rhyme'

Every morning before U.S. trading markets open, MarketWatch's London team shares ideas from professional money managers, traders and economists in the Need to Know column. You can sign up here to have the newsletter waiting in your inbox every morning. An example this week came from Harris "Kuppy" Kupperman, the founder of the Praetorian Capital hedge fund, who made a specific point for investors about the cost of the data-center buildout supporting the development of generative artificial-intelligence technology.

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What to expect in the stock market after a three-year bull run

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