A stunning three-day rally has catapulted the major indices back near their June all-time highs and, once again, has set a clear mandate for who has control of the market. The S&P 500 (SPX) has jumped 4% after almost reaching its 50-day average just three days ago. More impressively, the Nasdaq 100 (QQQ) has exploded 7.3% over the same time and has booked daily gains of more than 3% in two of the past three days. These are the best short-term advances since stocks were emerging from the "tariff tantrum" in April of 2025. Quick moves like this for the QQQ generally happen when the ETF is forming either a bottom after a correction/bear market or when it is breaking out after a decent decline and completing the bottoming process. This strength usually is not seen coming out of a minor 4.5% decline (as we just had).

Broadcom Inc. is a top five global fabless semiconductor company with leading franchises in wired and wireless communications, enterprise data center and storage, and other end markets. The former Avago acquired Broadcom for $37 billion in 2016 and changed its name to Broadcom Inc. The company has grown via hardware acquisitions, including Agere, LSI Logic, Brocade, and Emulex; and software acquisitions, including CA Inc. in November 2018 and Symantec's enterprise security business in November 2019. Broadcom completed the acquisition of VMware in December 2023.

Broadcom is one of the largest semiconductor companies in the world and has also expanded into infrastructure software. Its semiconductors primarily serve computing and networking, with custom AI accelerators now accounting for the bulk of the business. It is primarily a fabless designer, but holds some manufacturing in-house, such as for its best-of-breed film bulk acoustic resonator filters that sell into the Apple iPhone. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments. Broadcom is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as VMware, Brocade, CA Technologies, and Symantec in software.

The current bull market, which begins today with the S&P 500 at 7,473, started in October 12, 2022 and is now more than 3.5 years old. In that time, the S&P 500 has risen more than 110%, having endured high inflation, a credit rating downgrade of the U.S. Treasury, a hard-fought political election, the onset of tariffs and trade wars, a government shutdown, and now a war. Stocks have been supported by an economy that continues to grow, inflation and interest rates that had been heading lower, and robust profitability from S&P 500 companies. How much farther can this bull market go? We studied the 13 other bull markets that have occurred since the end of World War II. On average, the S&P 500 gained 164% during these periods, which averaged 57 months in duration, or just about five years. So the current rally is approaching average thresholds. But we also note that the recent bull markets have generated higher returns over longer periods of time, as economic growth has been more consistent and inflation generally has been tame. On average, the five bull markets since 1980 have seen stocks advance about 240% over a period of almost six years. And the bull market prior to the pandemic carried on for 11 years, during which stocks rose 500%. So while we are not in the early innings of the ball game, there is no reason to think that this is the bottom of the ninth. It is worth pointing out, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks are already near fair value in the current market environment. Further, the second year of the four-year presidential cycle consistently has delivered the weakest equity-market performance. We remain optimistic that stocks can post gains in 2026, but our base case outlook calls for single-digit returns, not the 15%-25% returns investors have enjoyed for the past three years.