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The stock market has only seen four such periods in 100 years – and history couldn’t be less clear about what will happen next

The stock market is set for another fantastic year in 2024. The broader benchmark S&P500 is above 6,000 and is up more than 27% this year (as of December 16). Fast-growing technology stocks, particularly in the field of artificial intelligence (AI), have fueled the bull market and show no signs of stopping as market strategists continue to raise their 2025 S&P 500 price targets.

The end of the rising interest rate environment has also helped the bulls, as lower interest rates typically lead to stock buying, and the economy still appears to be strong. Things are so good that the market is about to do something in 2024 that has only happened in four periods in the last hundred years – and history couldn’t be less clear about what will happen next.

The S&P 500 won’t just have a great year in 2024; it’s an excellent year in 2023, when the index rose more than 24%. Together, this means that the stock market has risen more than 58% over the past two years. Remember, the market has historically generated annual gains of about 10%.

Data per YCharts.

Something could disrupt this epic run in the final days of the year. After all, the past few years have been anything but smooth sailing. But if the S&P 500 rises more than 20% this year, it will be only the seventh time in four periods in the past 100 years that this has happened, according to the researchers. Barrons:

  • In 1927 and 1928 the market rose by 31% and 38%.

  • In 1935 and 1936 the market rose by 42% and 28%.

  • In 1954 and 1955 the market rose by 45% and 26%.

  • In 1995 and 1996 the market rose by 34% and 20%.

  • In 1996 and 1997 the market rose by 20% and 31%.

  • In 1997 and 1998 the market rose by 31% and 26%.

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Now I understand that the string of four years of gains of 20% or more between 1995 and 1998 are technically three separate examples of back-to-back events, but since they all happened in a row, I (and Barrons) it only counts as one period.

What happens in the third year, after two years of 20%+ gains, is somewhat mixed, but mostly leaning toward the negative.

After 1927 to 1928, the predecessor to the S&P 500 (the S&P 500 took its current form in 1957) fell 12% in 1929, signaling the start of the Great Depression and a difficult time for stocks. The market would fall by 90% over the next three years Dow Jones Industrial Average would not regain the value it had before the Great Depression until 1954.

During the years of the Great Depression, the market recovered more than 20% in 1935 and 1936, but fell by almost 40% the following year. The 1930s were a volatile decade for investors and the American economy.

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