MW When will this bull run end? These stock-market sectors are telling us what we need to know.

By Mark Hulbert

S&P 500 sectors that outperform just before market downturns aren't yet rising to the top

The final top of this bull market is at least three months away, according to a relative-strength analysis of the stock market's industry sectors. The chart below tells the story.

The chart is based on calculations from Ned Davis Research of sectors' average performance over the past three months of all bull markets since 1970. Consider the three S&P 500 SPX sectors that typically are at the bottom of late-bull-market relative-strength rankings: communication services, utilities and energy. In a ranking of relative strength over the past three months, those three sectors' average rank is sixth out of 10 - not the bottom but the middle of the pack.

Now consider the three sectors that tend to be at the top of late-bull-market relative-strength rankings: consumer discretionary, consumer staples and healthcare. Based on trailing three-month returns, those sectors are in seventh place out of 10. This typically doesn't happen when the stock market is topping out.

To be sure, sector relative-strength analysis is just one piece of the stock-market puzzle, and its current status doesn't at all guarantee that the bull market has further to go. The U.S. stock market remains extremely overvalued, and market sentiment is much closer to exuberance than skepticism.

Nevertheless, sector relative-strength analysis has recent successes to its credit. On at least three occasions over the past two years - April 2023, August 2023 and April 2024, for example - I used it to argue that you should give the bull market the benefit of the doubt. The S&P 500 today is significantly higher than it was at each of those prior times.

It also makes economic sense that certain sectors would tend to perform particularly well or poorly as bull markets come to an end. When the stock market sees economic weakness coming, for example, the sectors that tend to perform the best should be those that are least sensitive to an economic downturn, such as consumer goods and healthcare. The average beta of the three sectors that are the best late-bull-market performers, for example, is 0.83.

The bottom line: Insofar as the stock market's sectors perform in line with their historical tendencies at the end of major advances, the current bull market still has more life ahead.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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-Mark Hulbert

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June 30, 2025 17:01 ET (21:01 GMT)

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