S&P 500 jumps 10.2% in first half of 2026: What history says could happen next

S&P 500 gained 10.2% in the first half of 2026. Here’s what history, inflation, rates and the US economy suggest for the index next.

Updated on: Aug 20, 2026, 20:00:56 IST

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The S&P 500 had a strong start to 2026. The index gained 10.2% on a total-return basis during the first half of 2026, putting it among a group of years when strong first-half gains were followed by generally positive second-half returns.

History gives investors a reason to stay optimistic. Since 1927, there have been 30 times when the S&P 500 gained at least 10% in the first half of a year. In 23 of those 30 cases, the index also finished the second half with a gain. That means the second-half success rate was about 77%, according to The Motley Fool.

S&P 500 second-half returns

The average historical gain was also strong. In those 30 cases, the median second-half return was about 9%, while the average, or mean, return was about 6%, according to The Motley Fool. This suggests that a strong first half has often been followed by more gains.

S&P 500 history since 1990

The record looks even better in more recent history. Since 1990, there have been 11 occasions when the S&P 500 gained at least 10% during the first half of the year. The index posted a positive return in the second half every single time, giving it a 100% success rate, according to The Motley Fool.

Before 1990, the pattern was less reliable. Among the 19 earlier cases, the S&P 500 gained during the second half only about 63% of the time. The median second-half gain during those years was about 3%. The more recent record is much stronger.

For the 11 cases since 1990, the median second-half return was nearly 10%, compared with about 3% in the earlier period. But history also has some major exceptions. Some years before 1990 saw the S&P 500 post strong gains in the first half before suffering major losses later in the year.

1929 and 1933 market crashes

1929 is one major example. The market had a strong first half before suffering a major decline later in the year. That period came around the Great Depression, showing that a strong first half cannot guarantee a strong full year, according to The Motley Fool.

1933 was another warning example. The S&P 500 again had a strong first half but then suffered a large decline in the second half. That year also came during the difficult period surrounding the Great Depression.

1987 gives another important warning. The market had strong gains during the first half of the year, but those gains were later wiped out after the Black Monday crash in October 1987.

US economy and S&P 500

The US economy in 2026 is doing well, but growth is slowing. US GDP grew at an annualized 1.5% rate in the second quarter, down from 2.2% in the first quarter, according to the data cited by The Motley Fool. The latest GDP growth is also below last year's high. The economy had grown at an annualized 4.4% rate in the third quarter of 2025, meaning the current pace is much slower than that recent peak.

Inflation remains a concern for investors. US inflation was 3.4% in July, according to The Motley Fool. That was below the highs seen earlier in 2026, but it remained well above the Federal Reserve's 2% target. The job market is still in reasonably good shape. The US unemployment rate was 4.1%, according to The Motley Fool. Unemployment has stayed below 5% every month since late 2021.

AI boom supports stocks

Hiring data has been mixed. US non-farm payroll numbers have not been consistently strong, but the overall labor market still appears to be in reasonable condition. AI is another major reason behind the stock market's strength. The ongoing artificial intelligence boom has helped support stock prices as investors continue to put money into companies expected to benefit from AI growth.

S&P 500 outlook for 2026

The S&P 500 could be heading for another strong year. If the current gains continue, 2026 would become the fourth straight year of double-digit gains for the index, according to The Motley Fool. But investors should not assume another 10% gain is guaranteed. A strong first half has historically been a positive signal, especially since 1990, but economic conditions can still change quickly.

Corporate earnings could provide support. Strong earnings growth is one reason the current market may be able to avoid a major decline. Companies generating stronger profits can give investors more confidence in stock prices. Stock valuations have also become somewhat more reasonable. This could reduce some of the pressure on the market compared with periods when stocks were trading at extremely high prices, according to The Motley Fool.

However, inflation and interest rates remain risks. Inflation is still above the Fed's 2% target, while interest rates remain an important factor for investors. Higher inflation or rates could make it harder for stocks to continue rising.

The main takeaway from history is positive, but not certain. A first-half gain of 10% or more has usually been a good sign for the S&P 500, and the record since 1990 is especially strong. For 2026, the market has several things working in its favor: strong earnings growth, a reasonably healthy labor market and continued excitement around AI. At the same time, investors still face risks from slowing economic growth, above-target inflation and interest rates. These factors could limit how much further stocks can climb during the rest of 2026.

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