U.S. stocks S&P 500 hits new highs again!

Can the structural bull market in the second half of 2026 continue? In-depth review and outlook
Recently, the performance of U.S. stocks has been very impressive. Just in the recent trading day, the S&P 500 index has stabilized above 7,550 points, approaching the historical high, with many investment banks raising the full-year target price to the 8,000-8,500 range.
Since the beginning of the year, the index has already gained a considerable cumulative increase, and the core driver of this bull market remains the strong resonance of AI capital expenditure + energy dual engines.

On one hand, the AI wave continues to accelerate at a high level. Tech giants like Nvidia, Microsoft, Google (Alphabet) are highly likely to once again exceed expectations in their Q2 earnings.
Capital expenditure on AI data center construction, computing power demand, and model training far exceeds early-year market forecasts, and related industry chains (chips, servers, optical modules, electricity, etc.) are still expanding.
This is not just a story about tech stocks but also a reflection of the overall productivity improvement of the U.S. economy. Many institutions have raised their full-year AI-related expenditure expectations, expecting this trend to continue into the second half of the year.

On the other hand, geopolitical factors bring unexpected positive effects. After Iran's ceasefire agreement, oil prices have significantly retreated, which alleviates inflation pressures and creates better conditions for a "soft landing" of the economy.
Although Fed rate cut expectations have fluctuated in the short term, overall market confidence in loose monetary policy in the second half of the year is gradually warming.
Energy prices remain stable, which benefits consumption and provides a buffer for corporate profits.

However, under optimistic sentiment, we must remain clear-eyed about risks and concerns:
- Market breadth remains insufficient: although the index continues to hit new highs, the proportion of individual stocks outperforming the market is not high (currently only about 17%-30% of stocks contribute the main gains), with Mag7 (or expanded Mag8) still being the dominant force.
This "few stocks lifting the index" pattern means that once the leading stocks adjust, overall volatility could be quite large.
- Small-cap stocks in the Russell 2000 have recently shown obvious signs of catching up (performance this year has been impressive), but valuation repair is not yet thorough, and some small and mid-cap value stocks are still trading at low levels.
- Earnings growth remains strong (full-year EPS expected to grow about 23%), but if interest rates stay high for a long time (currently the Fed funds rate is between 3.5%-3.75%, and the probability of rate cuts this year has been delayed), or geopolitical risks re-emerge, market volatility is likely to increase significantly.

The second half of 2026 is most likely to still be a structural bull market rather than a broad rally. The core opportunities still revolve around two main lines:
1. Full-chain AI infrastructure: not only leading companies like Nvidia but also upstream chip design, computing equipment, midstream optical modules/servers, and downstream application deployment.
2. Energy transition + stable traditional energy sectors: benefiting from demand recovery after oil price declines, and growth in utilities (electricity) amid AI power consumption.
At the same time, it is recommended to appropriately allocate small-cap value stocks, engage in swing trading, and diversify risks.
Do not put all your eggs in the basket of a few tech giants; balanced allocation will better help you navigate volatility.