Fourth Straight Double-Digit Year Meets a Quarter-End Stall
Four straight double-digit years for the Nasdaq and S&P 500 would match the late 1990s. The final session of the third quarter showed why rising rates could end it.
The Nasdaq composite and the S&P 500 are on pace to finish 2026 with double-digit gains for a fourth consecutive year — a run not seen since the late 1990s — but closed the third quarter mixed, with the S&P 500 ETF at $762.63, down 0.21%, and the Nasdaq 100 ETF at $739.77, up 0.25%, as of 20:00 GMT on Sept. 30, 2026.
Two of the most-watched U.S. equity benchmarks are closing in on something the market has not managed in a quarter of a century. The Nasdaq composite and the S&P 500 are both on pace to finish the year with double-digit gains for the fourth consecutive time — a streak last achieved in the late 1990s, according to WSJ Markets. The complication is the way the market entered the final stretch: not sprinting, but limping, with rising interest rates sitting squarely in the path.
A split tape on the last day of the quarter
The closing session of the third quarter captured the split in miniature. The SPDR S&P 500 ETF Trust (NYSEARCA: SPY) finished at $762.63, down 0.21% from the prior close of $764.20, as of 20:00 GMT on Sept. 30, 2026. The Invesco QQQ Trust (NASDAQ: QQQ), which tracks the Nasdaq 100, closed higher at $739.77, up 0.25% from $737.93. The SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) took the worst of it, ending at $508.55, a fall of 0.84%.
That is a gap of roughly 1.09 percentage points between the Nasdaq proxy and the Dow proxy on a single session — a spread that, repeated often enough, is exactly how a market ends up with a headline index gain that most of its components never experienced. The tech-heavy benchmark held up; the industrial and financial names that dominate the Dow did not.
The intraday path was also revealing. All three funds closed at or within a whisker of the bottom of their daily ranges. SPY traded as high as $769.41 before finishing at $762.63 — a fade of about 0.88% from the session high. QQQ's high was $745.10 against a $739.77 close. DIA ranged up to $514.16 and closed at $508.55. Sellers had the last word in every case.
Why the concentration question keeps coming back
A four-year run of double-digit gains is, on its face, a story of strength. The more uncomfortable version is that a narrow group of large technology companies has done a disproportionate share of the lifting, and that the indexes are capitalization-weighted, meaning the biggest companies move the number most. When a handful of names carry the benchmark, the benchmark's performance stops describing the average stock.
The mechanical consequence is that index risk and single-name risk converge. An investor who owns a broad S&P 500 fund believing they hold 500 diversified businesses may in practice have a return profile driven by a much shorter list. That is not a new observation, but it becomes materially more important in the fourth year of a run, when valuations have already absorbed several years of good news and the margin for disappointment is thinner.
The late-1990s comparison is the part that makes investors twitch. It is offered as a statistical rarity, not as a forecast — but the previous instance of four straight double-digit years is remembered chiefly for what followed it. Pattern-matching across decades is a poor basis for a portfolio decision. What it does justify is a harder look at how much of a given portfolio's return has come from the same few tickers.
What rising yields actually do to a growth-led market
Rising rates are the specific threat flagged into the fourth quarter, and the transmission mechanism is straightforward enough to state plainly. A company valued mostly on profits expected years from now is worth what those future profits are worth today. The higher the discount rate — which moves with government bond yields — the less those distant profits are worth in present terms. Long-duration growth stocks, which describes most of the technology complex, are the most sensitive to that arithmetic.
There is a second channel. When Treasury yields rise, the risk-free return available without owning equities rises with them. That raises the bar every stock has to clear to justify its place in a portfolio, and it tends to pull money out of the highest-multiple corners first. A market whose gains have been concentrated in those corners has more to lose from the move than a broad, cheap one would.
The Dow's underperformance on the quarter's final session is worth holding alongside that. Rate moves do not hit every sector the same way, and a session in which the Nasdaq proxy rises while the Dow proxy falls nearly a percent is not a simple risk-off day. It is a rotation — and rotations at quarter-end frequently have as much to do with portfolio rebalancing as with conviction.
What to watch through the fourth quarter
- Breadth, not level. Whether advances outnumber declines on up days matters more than the index print. A benchmark grinding higher on narrowing participation is a fragile benchmark.
- The yield curve's long end. Short-rate policy gets the headlines, but it is the long end that sets the discount rate on growth equities.
- Third-quarter earnings from the large-cap technology names. The multiple is doing the work only until the earnings stop supporting it.
- The Dow-versus-Nasdaq spread. If the gap keeps widening in the Nasdaq's favor, concentration is deepening. If it closes, capital is broadening out — usually a healthier configuration.
How a long-term holder should read it
None of this argues for abandoning equities. Streaks end, and the fact that one is unusual says nothing about when. What the setup does argue for is knowing the composition of what you own. Two investors both holding "the market" can have very different exposures depending on whether their fund weights by market value or equally, and whether their satellite positions duplicate the same handful of mega-cap technology names their core index fund already holds.
The fourth quarter will resolve whether the streak becomes a fact or a near-miss. The last session of the third quarter — three major benchmarks closing at the low end of their ranges, with the Dow down 0.84% while the Nasdaq 100 proxy squeezed out a gain — is a reasonable snapshot of a market that has been carried a long way by a short list and is now being asked, by the bond market, to justify it.
Key facts
- S&P 500 ETF (SPY): $762.63, -0.21%, close of Sept. 30, 2026 (20:00 GMT)
- Nasdaq 100 ETF (QQQ): $739.77, +0.25%, same close
- Dow 30 ETF (DIA): $508.55, -0.84%, same close
- The streak at stake: Fourth straight double-digit annual gain for Nasdaq composite and S&P 500 — first since the late 1990s
Frequently asked questions
What is the streak the Nasdaq and S&P 500 are chasing?
Both the Nasdaq composite and the S&P 500 are on pace to finish the year with double-digit percentage gains for the fourth consecutive year. According to WSJ Markets, that would be the first such run since the late 1990s. The streak is not yet complete — the fourth quarter still has to deliver — and rising interest rates are the main identified risk to it.
How did the major benchmarks close out the third quarter?
As of the last trade at 20:00 GMT on Sept. 30, 2026, the SPDR S&P 500 ETF closed at $762.63, down 0.21%. The Invesco QQQ Trust, tracking the Nasdaq 100, closed at $739.77, up 0.25%. The SPDR Dow Jones Industrial Average ETF closed at $508.55, down 0.84% — the weakest of the three.
Why do rising interest rates threaten technology stocks in particular?
Technology companies are typically valued on profits expected well into the future. Those future profits are discounted back to a present value using a rate that moves with government bond yields. When yields rise, the discount is steeper and the present value falls. Higher yields also raise the risk-free return available elsewhere, which lifts the bar every equity must clear.
What does index concentration mean for an ordinary index fund holder?
The S&P 500 and Nasdaq composite are capitalization-weighted, so the largest companies move the index most. If a small group of mega-cap technology names drives most of the gain, a broad index fund's return is effectively determined by that short list rather than by 500 diversified businesses. The diversification is nominal rather than functional.
Is the late-1990s comparison a warning signal?
It is a statistical observation, not a forecast. Four consecutive double-digit years is rare, and the last occurrence was in the late 1990s. What followed that period is well known, but pattern-matching across decades is weak evidence for any single portfolio decision. The useful response is examining how concentrated your own holdings have become.
What indicators should investors watch in the fourth quarter?
Market breadth — whether advancing stocks outnumber decliners on rising days — matters more than the index level itself. The long end of the Treasury yield curve sets the discount rate on growth equities. Third-quarter earnings from large-cap technology companies will test whether the valuations are earned. The spread between Nasdaq and Dow performance signals whether concentration is widening.
Sources
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