The benchmark index hasn’t had a winning streak like this since 1998.
The S&P 500 (^GSPC 0.56%) is the most universally recognized benchmark of stock market activity in the U.S., made up of the 500 largest companies in the country. Because of its broad base of constituent businesses, it is considered by most investors to be the most reliable gauge of stock market performance.
The index has charged steadily higher since the start of 2023, fueled by a flurry of positive market drivers:
- Increasing corporate profits
- Improving economic conditions
- The advent of the artificial intelligence (AI)
- Interest rate cuts by the Federal Reserve Bank
- An uncontested election
Thanks to this quintet of bullish developments, the S&P 500 is poised to generate its second consecutive year of 20%+ returns, which hasn’t happened since 1998. That could signal a big move for the stock market in 2025.
A robust rally
After suffering through the worst economic conditions since the Great Recession, the market recovery is in full swing, and the past couple of years have been profitable ones for investors. The S&P 500 generated gains of 24% in 2023 and is up more than 26% thus far in 2024 (as of this writing).
It’s worth noting that the benchmark index has delivered back-to-back years of 20%+ gains just eight times since 1950. If the market’s momentum holds, that could foreshadow a big move for the S&P 500 next year.
We’re just over two years into the current bull market, which kicked off on Oct. 12, 2022. While every bull market is different, a look at the past can help provide context. The average bull market lasts just over five years or 1,866 days. The market bottom occurred just over two years ago, which suggests there’s still upside ahead. Additionally, since its trough, the S&P 500 has gained roughly 68%. That pales in comparison to the average bull market, which delivers gains of 180%. The data suggests that we’re still in the early days of the current rally.
There’s more. Existing data suggests the current market rally will likely continue, according to Ryan Detrick, chief market strategist for financial services company Carson Group. Detrick poured over charts going back to 1950 and found just eight instances when the S&P 500 generated gains of 20% or more in successive years. In six of those, the market rally continued into the third year, generating average returns of 12%.
