The S&P 500 has posted gains of 15% or more for three consecutive years only eight times since 1926.
There is no clear historical pattern as to what happens in the fourth year after a hot streak for the index.
Investors should focus on a larger S&P 500 trend.
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A lot can happen to the stock market in the last two and a half weeks of the year. Stocks could be stockpiling in a year-end slump. Strong growth may begin. Or the one S&P 500(SNPINDEX: ^GSPC) could finish 2025 with a gain close to where it is now.
If I had to bet, I’d put my money on the third scenario. Assuming I’m right (or wrong, but a strong Santa rally rules), the S&P 500 will do something that’s only happened eight times in the last 100 years.
What is this relatively rare performance that the S&P 500 could be about to achieve? Delivering a gain of at least 15% for three years in a row.
The S&P 500’s roots as a daily composite stock index date back to 1926. It originally tracked just 90 stocks. In later years, more stocks were added. In 1957, the S&P 500 was established in its current form with the stocks of 500 US companies. (By the way, the number of stocks in the index is more than 500 because of a few companies that list multiple share classes.)
In its 100 years as a daily stock index, the S&P has gained at least 15% about half the time. However, stringing together three consecutive years of such profits proved to be much more difficult.
As previously mentioned, this feat has only happened eight times. Since the S&P 500 has existed in its current 500-member form, a three-year streak of 15% or more gains has happened only four times.
The predecessor S&P 500 first posted gains of at least 15% for three consecutive years between 1942 and 1944. With the U.S. still in a war economy, the index rose another 36% in 1945. This return marked the second three-year streak of gains of 15% or more.
However, history buffs know that World War II ended in 1945. Factories that were operating at full capacity to produce equipment, supplies, and weapons needed by the military slowed down. In 1946, the early version of the S&P 500 was down about 8%.
It would be several years before another bull market began. From 1949 to 1951, the index again rose by at least 15% each year. This momentum continued into 1952 with an 18% gain, which provided another three-year streak of returns of 15% or more. But the sizzle of the stock market has dissipated somewhat. In 1953, its predecessor the S&P 500 fell nearly 1%.
Investors had to wait more than four decades for the next run of the S&P 500. Between 1995 and 1997, the index rose more than 20% each year. It rose more than 28% in 1998 and about 21% in 1999. The 1990s provided three consecutive three-year periods of returns of 15% or more. Then the dot-com bubble burst, with the S&P 500 falling 9% in 1999.
That brings us to the last official three-year streak of gains of 15% or more. It took place between 2019 and 2021, with the so-called “Magnificent Seven” stocks leading the market. However, a bear market in 2022 ended the fun for investors as the S&P 500 fell 18%.
Image source: Getty Images.
You may have noticed that there is no clear historical pattern as to what happens after the S&P 500 rises 15% or more for three consecutive years. In four cases, the index maintained its momentum. In the other four periods, however, the S&P 500 fell at the end of a three-year winning streak.
What’s in store for 2026 if the S&P 500 finished 2025 up at least 15%? If history is any guide, there’s no way to know. In fact, there is no way to know how stocks will perform, even if we ignore all historical data.
The most important trend for investors to notice is that the S&P 500 has risen more than it has fallen. Whatever happens next year, buying and holding top stocks should pay off in the long run.
Before buying stocks in the S&P 500 index, consider the following:
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The S&P 500 is about to do something it’s only done 8 times in 100 years. Here’s what history suggests will happen in 2026. was originally published by The Motley Fool
