Will the Stock Market Bounce Back in 2026? What 100 Years of Data Reveals About the Next Rally

The Current Momentum: Three Years of Consecutive Gains

After delivering a robust 14%+ return in 2025 following exceptional performances in 2023 (24% return) and 2024 (23% return), the S&P 500 has left many wondering: when will the stock market go back up if it’s already climbing at this pace? The answer lies deeper than surface-level market movements.

Those who invested in Vanguard S&P 500 ETF (VOO) during the October 2022 market bottom have seen their capital nearly double in just over three years. This exceptional performance has pushed the S&P 500 near all-time highs, creating legitimate questions about sustainability.

Historical Patterns: Four-Year Rallies Are More Common Than You Think

Here’s where history becomes your investment guide. Since Standard & Poor’s began tracking market-weighted stock indices in 1926, the market has climbed roughly three out of every four years. But there’s a more specific pattern that matters now.

The data reveals 37 instances where the S&P 500 rose during each of three consecutive years. In 24 of those periods—approximately 65% of the time—the index continued climbing for a fourth consecutive year. This suggests that when will the stock market go back up may be less relevant than asking whether it will stay up.

Performance Metrics Worth Noting

The average four-year total return for the S&P 500 over the past century stands at 55%. Since January 2023, the index has surged roughly 75%, outpacing this historical average. While some analysts argue this signals mean reversion is due, market behavior rarely follows textbook patterns.

Historically, the S&P 500 produces returns between 9% and 15% only nine times since 1926—despite an average annual return of approximately 12%. The market tends to experience extended growth phases punctuated by sharp corrections rather than steady, predictable trajectories.

The AI Bubble Concern: Real Risk or Overblown?

Critics point to valuation metrics, noting the S&P 500 appears expensive by almost any measure. The artificial intelligence investment boom—with major tech companies pouring billions into AI infrastructure—has fueled growth beyond historical norms. J.P. Morgan estimates AI capital expenditures contributed 1.1 percentage points to U.S. GDP growth in the first half of 2025.

Yet timing bubble collapses remains impossible. The dot-com bubble didn’t burst until 2000, but investors experienced nine consecutive years of positive returns leading up to the crash, including five years exceeding 20% gains. Those who exited after the mid-1990s bull run missed a subsequent 55% rally.

What This Means for 2026 and Beyond

The persistent question—when will the stock market go back up in 2026?—may have a counterintuitive answer: it likely already will be. Historical precedent suggests four consecutive years of gains are more probable than corrections. While short-term market movements remain unpredictable, long-term trends favor continued appreciation.

Netflix exemplifies this principle. Investors who purchased during early recommendations (December 2004) with just $1,000 would have accumulated over $511,000. Nvidia showed similar returns, turning a $1,000 investment in April 2005 into over $1 million.

The legendary Peter Lynch, who managed the Fidelity Magellan Fund to 13 consecutive years of positive returns, observed that more capital has been lost through anticipating corrections than through corrections themselves.

The Bottom Line

The S&P 500 can absolutely continue rallying in 2026. Whether it will remains uncertain, but market history suggests positioning defensively after three consecutive up years may be precisely the wrong move. The long-term trend favors equity exposure, and attempting to time market re-entry after sitting out gains often proves more costly than staying invested.

Data current through December 2025.