History Tells S&P 500 Can See Double-Digit Returns in 2025 After Consecutive 20%+ Past Two Years, Don't Be Bearish Now
1min read The S&P 500 index surged 26% in 2023 and is expected to rise another 27% this year. As 2024 draws to a close, investors are increasingly concerned about the direction of the U.S. stock market next year.
According to Ryan Detrick, Chief Market Strategist at Carson Group, while 2025 may not replicate the over 20% gains of the past two years, investors are likely to see another year of significant growth.
In his latest report released on Monday, Detrick emphasized that historically, the U.S. stock market could continue its bull run next year, with returns exceeding the average annual return of around 10%.
Detrick's research shows that since 1950, there have been eight instances where the S&P 500 index has risen by 20% or more for two consecutive years. In six of those cases, the U.S. stock market achieved positive returns in the third year, with an average return of 12% and a median return of 13%.
What really stood out to me about the data is the mid- to late-1990s saw an incredible record of five years in a row of 20% or more gains. We didn't have social media back then, but I could only imagine how mad that would have made the bears, Detrick noted.
The main reasons Detrick is optimistic about the U.S. stock market next year include the overall robust economy and rising corporate profits.
He pointed out, When your economy continues to surprise on the upside, you tend to see strong performance. The S&P 500's earnings per share are expected to reach $269 next year, up 19% from the beginning of 2023. When we see corporate profit expectations hitting new highs, we consider it a strong reason to hold more stocks, and we are still adding to our positions, he added.
Detrick also mentioned that bull markets last longer than you think, with an average duration of five and a half years.
He noted that the current bull market only turned two years old this October, indicating that the U.S. stock market still has considerable upside potential, even after a strong bull run over the past two years.
Recently, with President-elect Trump set to take office in January next year, the U.S. stock market has been jubilant, and Wall Street has been overwhelmingly bullish, raising their target points for the S&P 500 index next year.
For instance, Deutsche Bank set the S&P 500 index's target point at 7,000 by the end of 2025 on Monday, expecting strong corporate earnings growth to continue into next year. Barclays raised its target price from 6,500 to 6,600, citing a strong U.S. economy, gradually falling inflation, and strong potential profit growth for large tech companies.