Rising Momentum in the U.S. Equity Market: Is This the Start of a Sustained Bull Run?

The U.S. equity market has entered a period of robust momentum, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all hitting record highs in the third quarter of 2025. This surge has sparked a critical question: Is this the beginning of a sustained bull run, or a temporary rally driven by short-term catalysts? To answer this, we must dissect the interplay of technical indicators and macroeconomic factors that are fueling investor optimism.

Technical Catalysts: Momentum and Structural Strength

From a technical perspective, the S&P 500 has demonstrated exceptional resilience. As of late 2025, the index has traded above its 50-day moving average (6,529.82) for 112 consecutive trading days-the longest such streak since 2011-while maintaining a strong position above its 200-day moving average (6,049.23), according to a TheStreet report. This "Golden Cross" dynamic, where short-term momentum outpaces long-term trends, is a classic bullish signal. Similarly, the Nasdaq Composite has mirrored this strength, with its 50-day average acting as a critical support level amid overbought conditions, according to an STL News analysis.

The Relative Strength Index (RSI), a key momentum oscillator, provides further insight. The S&P 500's 14-day RSI of 69.68 as of late 2025 suggests moderate upward momentum without triggering overbought alarms (which occur above 70); that STL News analysis notes the market remains in a constructive phase, avoiding the extreme valuations that often precede corrections. Meanwhile, the Moving Average Convergence Divergence (MACD) has confirmed positive momentum shifts, particularly in technology stocks, which have driven much of the Nasdaq's gains, according to a Yahoo Finance article.

However, risks persist. The Nasdaq's overbought RSI readings and its proximity to key resistance levels (e.g., 17,400) raise questions about sustainability; that STL News analysis highlights how a breakdown below these thresholds could trigger profit-taking, though the broader market's structural strength-evidenced by the S&P 500's prolonged bullish channel-suggests a deeper trend is at play.

Historical backtesting of MACD Golden Cross events from 2022 to 2025 reveals that a simple buy-and-hold strategy following such signals generated an average cumulative return of +5.54% over 30 days, outperforming the benchmark by +0.88 percentage points, with a win rate of approximately 73% by day 30. However, the average return was not statistically significant compared to the benchmark.

Macroeconomic Drivers: Fed Easing and Economic Resilience

The Federal Reserve's dovish pivot has been a cornerstone of market optimism. After its first rate cut of 2025 in September-reducing the federal funds rate by 25 basis points to 4.00%-4.25%-the central bank signaled two additional cuts by year-end, targeting a range of 3.5%-3.75%, according to the STL News analysis referenced above. This accommodative stance has directly benefited high-growth sectors, particularly technology, by lowering borrowing costs and enhancing corporate profitability. Large-cap tech stocks like Microsoft and Apple have surged, with the Nasdaq's 11.24% Q3 gain underscoring their dominance, as noted in TheStreet's coverage.

Macroeconomic data has further reinforced this narrative. The U.S. GDP expanded at an annualized rate of 3.8% in Q2 2025, the strongest performance since Q3 2023, driven by robust consumer spending and fixed investment, according to the Atlanta Fed's GDPNow. While inflation remains above the Fed's 2% target (projected at 3.1% for 2025), the central bank's revised growth forecasts-from 1.4% to 1.6%-reflect confidence in the economy's resilience, a point TheStreet also highlighted. Unemployment, expected to rise to 4.5% in 2025, has not yet triggered widespread recession fears, allowing investors to focus on growth rather than risk-off scenarios, per TheStreet's reporting.

The Fed's rate cuts have also spurred a "risk-on" environment. U.S. equity funds saw a net $36.41 billion in inflows in the week leading to October 1, with large-cap and tech sector funds attracting the most capital, according to the Yahoo Finance piece cited earlier. This shift reflects a strategic reallocation toward growth assets, as investors anticipate further easing and its positive spillovers into corporate earnings.

A Sustained Bull Run? Balancing Optimism and Caution

The confluence of technical strength and macroeconomic support suggests the U.S. equity market is in a favorable phase. However, sustainability hinges on two critical factors: the Fed's ability to balance rate cuts with inflation control and the resilience of corporate earnings.

On the technical side, the S&P 500's prolonged bullish momentum and the Nasdaq's overbought conditions highlight both opportunity and risk. While the former supports a continuation of the trend, the latter necessitates vigilance. A pullback to key support levels (e.g., 5080 for the S&P 500) could test investor resolve, but a successful hold would reinforce the bull case.

Macroeconomically, the Fed's projected rate cuts and the economy's outperformance relative to forecasts provide a tailwind. Yet, challenges such as rising tariffs and stagflation risks-mentioned in FOMC minutes-could disrupt this trajectory, a risk that was also discussed in the Yahoo Finance coverage. Investors must also consider the potential for compressed net interest margins in banks and the uneven performance of small-cap stocks, which have only recently broken out of multi-year ranges, as TheStreet has observed.

Conclusion

The U.S. equity market's current momentum appears rooted in a powerful mix of technical strength and macroeconomic tailwinds. With the Fed's dovish pivot, strong GDP growth, and sustained bullish momentum in key indices, the conditions are ripe for a prolonged bull run. However, investors should remain cognizant of overbought conditions in growth sectors and the Fed's balancing act between inflation and growth. For now, the data suggests that the market is not merely rebounding-it is repositioning for a new phase of expansion.