The current U.S. stock bull market is near, but not at, historical bubble peaks.

Original author: Zhao Ying

Source: Wall Street Journal

The latest assessment by Goldman Sachs' chief U.S. equity strategist shows that current market exuberance has risen to the 86th percentile historically, approaching but not yet reaching the extreme levels seen during the 2000 dot-com bubble and the 2021 bull market peak.

Over the past two months, the S&P 500 surged 15% before a Friday pullback, a move that ranks in the 99th percentile since 1980. In his latest report, Goldman Sachs’ Chief U.S. Equity Strategist Ben Snider noted that although none of the four classic signals of historical bull market tops—speculative fervor, deteriorating growth, massive equity issuance, and Fed tightening—are fully in place, each is now closer to its trigger threshold than it was months ago.

For the market, this assessment implies that there is still room for the current bull market, but risks are accumulating. Snider explicitly stated, "We haven't gotten there yet," while warning that the market does not need to wait for investor euphoria to decline, as historical patterns may not repeat themselves in this cycle.

The speed of this rally has left a mark in history. According to Goldman Sachs data, the S&P 500 rose 15% in approximately two months, with a return-to-volatility ratio nearing 4 relative to realized volatility—the highest level in over 50 years.

Artificial intelligence is the core theme driving this market rally. AI-related stocks, momentum factors, and major market indices are rising in sync, creating strong resonance.

Snider noted that, unlike previous momentum-driven rallies (such as those at the end of 1999 and the end of 2021), this rally is primarily supported by significant upward revisions in near-term earnings expectations, rather than mere sentiment-driven speculation, giving this upward movement a more solid fundamental foundation.

To quantify current market sentiment, Snider constructed a comprehensive evaluation framework encompassing nine metrics across four categories. Historical data shows that during the peak of the 2000 dot-com bubble, the median ranking of these metrics reached the 100th percentile; at the 2021 bull market peak, it was at the 95th percentile. The current reading stands at the 86th percentile—above the historical average, but still significantly below the levels seen during the two previous extreme peaks.

Looking specifically, Goldman Sachs' speculative trading indicator has risen recently but remains below levels seen at the end of 2025 and far below the peaks of 2000 and 2021. Among various speculative trading activities, trading volume for overvalued stocks has recently surged, while trading activity for loss-making stocks has remained relatively moderate. In addition, both the volume of stock call options and retail margin balances are on the rise, indicating growing investor sentiment.

It is worth noting that the breadth of this rally has been extremely narrow, though it has not yet reached the extreme concentration seen during the dot-com bubble.

Goldman Sachs' analytical framework attributes the end of historically overvalued, highly concentrated bull markets to four factors: speculative frenzy, deteriorating growth prospects, extreme expansion of stock issuance, and Federal Reserve policy tightening. Snider notes that none of these four conditions are fully met in today's environment, but each is closer to warning levels than it was at the beginning of the year.

IPO activity is rebounding, and pressure is emerging on the equity issuance side; rising input costs are squeezing corporate profit margins, posing a potential threat to growth prospects; interest rate markets have begun pricing in an increased probability of Fed rate hikes, although Goldman Sachs economists believe the actual likelihood of rate hikes remains low.

Snider also emphasized that market declines do not require extreme investor euphoria, and the euphoric characteristics seen at past bull market peaks may not manifest in the same way during this cycle. This means that even if current indicators have not reached historical extremes, investors should not view this as sufficient assurance of a safety margin.

Overall, Goldman Sachs' assessment offers a cautious but not pessimistic view: the enthusiasm of this bull market is "getting increasingly close" to the historical peak range, but has not yet reached it. The key support for this judgment lies in the fact that the current rally is still underpinned by improving earnings expectations, rather than being driven purely by sentiment. However, as momentum factors remain strong, market concentration stays high, and certain risk signals quietly intensify, Snider’s report essentially warns investors: the window is still open, but it is gradually closing.