At the midpoint of the year, the S&P 500 is up around 6%. A few months ago, investors were bracing for the worst amid the threat of tariffs and trade wars. The sentiment improved significantly since then as there's much more bullishness in the markets these days, and many stocks have been performing exceptionally well.
Does a good start like this suggest that 2025 will be a good year for the market? Is the S&P 500 likely to continue rallying in the latter half of the year? Here's what the historical data says.
Image source: Getty Images.
Positive single-digit returns aren't all that uncommon, but they are a recent exception
I looked at S&P 500 data going back the past 25 years and found that in 11 of those years, the broad index was up in positive territory by the end of the first half. I excluded double-digit gains to focus simply on performances where the market was doing well but perhaps not taking off.
What's notable, however, is just how volatile the markets have been in recent years. For example, in five of the past six years, the S&P 500 was either up or down by double digits after six months.
| Year | S&P 500 Return by End of June |
|---|---|
| 2024 | +14.5% |
| 2023 | +15.9% |
| 2022 | -20.6% |
| 2021 | +14.4% |
| 2020 | -3.8% |
| 2019 | +17.4% |
Calculations and table by author. Source: Google Finance.
This year has been a volatile one, but in terms of percentage gains, it looks relatively stable by comparison. The last time the market was up by just single digits at the halfway point was back in 2018 when the S&P 500 rose by less than 2%.
Will the market rally in the second half?
Now, let's pivot to the years with single-digit gains through the first half and look at how the S&P 500 performed in the second half.
On average, the S&P 500 rose by 4.6% in the second half after posting a positive single-digit return in the first half of the year.
| Year | First-Half Return | Second-Half Return |
|---|---|---|
| 2018 | 1.7% | -7.8% |
| 2017 | 8.2% | 10.3% |
| 2016 | 2.7% | 6.7% |
| 2015 | 0.2% | -0.9% |
| 2014 | 6.1% | 5% |
| 2012 | 8.3% | 4.7% |
| 2011 | 5% | -4.8% |
| 2009 | 1.8% | 21.3% |
| 2007 | 6% | -2.3% |
| 2006 | 1.8% | 11.7% |
| 2004 | 2.6% | 6.2% |
Calculations and table by author. Source: Google Finance.
Overall, the data suggests a positive trend for the markets, which could lead to further gains ahead. However, that doesn't mean that it's a given by any means.
Every year is different, and 2025 is not shaping up to be a typical one. In just six months, the S&P 500 has gone from being deep into negative territory to now being up nearly 6% for the year. Investor sentiment has gone from despair and fear to optimism and excitement. I wouldn't expect anything less than more volatility and unpredictability in the second half of this year.
Should you stay invested in the market?
Regardless of whether you think the S&P 500 is going to go up or down over the next six months, it has generally been a great idea to remain invested in stocks over the long haul. The S&P 500, which tracks the top 500 stocks on U.S. exchanges, has averaged annual gains of around 10% per year for decades. Although not every year will be a good one, trying to predict when the market will do well and when it will struggle can be next to impossible.
The safer and more dependable option is to invest for the long term and ride out the volatility. Investing in an exchange-traded fund (ETF) that tracks the S&P 500 can be an excellent way to benefit from the market's growth over the years.
