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The S&P 500 is up nearly 20 per cent from its October 2022 lows and within striking distance of a bull market -- thats investor-speak for a period of time marked by rising stock prices and optimism on Wall Street, the media reported.

But economists are warning investors to hold off on celebrating, at least for now. This could still be a bear market dressed in a bull's clothing, CNN reported.

Markets have remained surprisingly resilient over the past nine months, as 2022 losers like tech and media have bounced back from a disastrous year on hope that the worst is over for those industries.

Over the past week, markets have gained momentum, likely because of the end of the debt ceiling crisis, optimism that the Federal Reserve will pause rate hikes at its June meeting and a recent string of strong economic readings.

And while those are all positives for the economy, analysts fear that this is a bear market rally that could end up biting investors, CNN reported.

The S&P 500 is weighted and top-heavy, meaning that just a few companies are able to boost the index even as the majority of stocks struggle.

"Exuberance around artificial intelligence, along with a resurgent US dollar, has produced extreme divergence and concentration risk in the main stock indexes," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "Such narrowness is not what new bull markets are built on."

Sameer Samana, senior global market strategist for Wells Fargo Investment Institute said: "The key difference for us is that you tend to see bull markets coincide with economic expansions, not economic contractions.

"Still, since the last bull market, we've had a pandemic, a war in Europe, a banking crisis and a debt crisis among other dramas. Markets are in uncharted territory and while an economic recession coinciding with a Wall Street boom would be a first, "in this market, you never say never."

Investors should "avoid getting sucked into this as a new bull market", CNN quoted Samana as saying.

"Keep perspective of what this is, which is a very tantalizing bear market rally."