The S&P 500 (^GSPC 0.45%) finished a strong first half of 2026 with a 9.6% return (and 10.2% on a total return basis). Historically, that’s an unusually strong return for the first six months of a calendar return. And it could mean very good things for what the second half may have in store.
S&P 500: Strong first halves tend to lead to strong second halves
Since 1990, this year represents the 12th time that the S&P 500 has returned at least 9% in the first half of the year. In those dozen instances, the median first-half return was 14.4%, with 2026’s return actually being the smallest of the bunch.
Image source: Getty Images.
But history shows that the positive returns don’t end there. In fact, in each one of the previous 11 instances, the S&P 500 was positive in the second half of the year as well. And not just positive — strongly positive, as the table shows.
| Year | H1 Return | H2 Return | Full-Year Return |
|---|---|---|---|
| 1991 | +12.4% | +12.4% | +26.3% |
| 1995 | +18.6% | +13.1% | +34.1% |
| 1997 | +19.5% | +9.6% | +31% |
| 1998 | +16.8% | +8.4% | +26.7% |
| 1999 | +11.7% | +7% | +19.5% |
| 2003 | +10.8% | +14.1% | +26.4% |
| 2013 | +12.6% | +15.1% | +29.6% |
| 2019 | +17.3% | +9.8% | +28.9% |
| 2021 | +14.4% | +10.9% | +26.9% |
| 2023 | +15.9% | +7.2% | +24.2% |
| 2024 | +14.5% | +7.7% | +23.3% |
| 2026 | +9.6% | ? | ? |
Data source: Yahoo! Finance.
The minimum second-half return in past cases was 7%, with the median landing at 9.8%. Over five years, second-half returns were at least 10%.
Full-year returns exceeded 20% in all but one instance, and that one came in at 19.5%.
How the market environment could set up for a strong second half in 2026
The standard disclaimer applies: Past performance doesn’t indicate future results. Just because this data set has been 11-for-11 over the past 35 years doesn’t mean that 2026 will be the same.
But if we examine the economic and market backdrop, there’s a clear case for why it could happen.
First and foremost are the current revenue and earnings growth forecasts for the next six months and beyond. FactSet estimates are currently calling for 24% earnings growth in 2026 and another 17% in 2027. One of the largest contributions to those numbers is still expected to come from tech and semiconductor stocks. As I’ve mentioned, I believe it will be tougher for the S&P 500 to experience a severe pullback with that kind of earnings growth in the background.
But the risks of high inflation, geopolitics, and the possibility of Fed rate hikes can’t be discounted. The S&P 500 experienced a 9% drawdown in the first half of the year, largely due to these factors. It’s not unreasonable to think it could happen again in the second half if any one of these factors escalates.
Overall, I believe stocks are setting up nicely for another positive second half, and the S&P 500 is still a buy here.
