Nearly 5,500 companies were listed across U.S. stock exchanges as of the third quarter, according to the Securities Industry and Financial Markets Association (SIFMA). Many of those companies are included in major stock indexes that measure various aspects of the domestic market.
However, the S&P 500 (^GSPC +0.65%) is widely considered the best benchmark for the overall U.S. stock market. Read on to see the index's average return over the last 10 years, and what Wall Street expects in 2026.
Image source: Getty Images.
The S&P 500 returned 13.5% annually over the last decade (excluding dividends)
The S&P 500 was created in March 1957. The index tracks the performance of 500 large-cap U.S. companies that account for over 80% of domestic equities by market value. While inclusion is ultimately at the discretion of a selection committee, companies have to meet specific eligibility criteria, including generally accepted accounting principles (GAAP) profitability, sufficient liquidity, and a minimum market value of $22.7 billion.
The index is rebalanced quarterly after the U. S. markets close on the third Friday of March, June, September, and December. However, companies can be added at any time. Most recently, CRH, Carvana, and Comfort Systems were added to the S&P 500 in December.
The top five holdings are listed by weight below:
- Nvidia: 7.7%
- Apple: 6.5%
- Microsoft: 6%
- Alphabet: 5.7
- Amazon: 3.9%
Excluding dividends, the S&P 500 returned 256% in the last decade, compounding at 13.5% annually. Including dividends, the index returned 323%, compounding at 15.5% annually. Those figures are well above the 30-year averages of 8.4% annually (excluding dividends) and 10.4% annually (including dividends).
The 30-year averages are likely a more accurate estimate for forward returns, meaning it is reasonable to assume the index will achieve a total return of about 10.4% annually over long periods in the future. Investors can get exposure to the index with an S&P 500 exchange-traded fund.
Wall Street expects the S&P 500 to increase 10% in 2026
Most Wall Street analysts are optimistic about the stock market's potential returns in 2026. The table shows year-end targets for the S&P 500 set by different investment banks and research organizations. It also shows the implied upside (or downside) versus the index's current level of 6,922.
|
Wall Street Firm |
S&P 500 Target Price (2026) |
Upside (Downside) |
|---|---|---|
|
Oppenheimer |
8,100 |
17% |
|
Deutsche Bank |
8,000 |
16% |
|
Morgan Stanley |
7,800 |
13% |
|
Seaport Research |
7,800 |
13% |
|
Evercore |
7,750 |
12% |
|
RBC Capital |
7,750 |
12% |
|
Citigroup |
7,700 |
11% |
|
Fundstrat |
7,700 |
11% |
|
Yardeni Research |
7,700 |
11% |
|
Goldman Sachs |
7,600 |
10% |
|
HSBC |
7,500 |
8% |
|
Jefferies |
7,500 |
8% |
|
JPMorgan Chase |
7,500 |
8% |
|
UBS |
7,500 |
8% |
|
Wells Fargo |
7,500 |
8% |
|
Barclays |
7,400 |
7% |
|
BMO Capital |
7,400 |
7% |
|
CFRA |
7,400 |
7% |
|
Bank of America |
7,100 |
3% |
|
Average |
7,616 |
10% |
Data sources: BMO Capital Markets, Reuters, Yahoo! Finance. Table by author.
As shown, the S&P 500 has an average year-end target of 7,616 among 19 Wall Street analysts. That implies 10% upside from its current level of 6,922. Not shown in the chart is that the median year-end target is 7,600, which also implies 10% upside
As a caveat, Wall Street's forecasts concerning the S&P 500 are often very wrong. In fact, during the five-year period from 2020 to 2024, analysts' median year-end target was wrong by an average of 18 percentage points, according to data from Goldman Sachs. That does not mean Wall Street is incompetent, but rather predicting the future is impossible.
This year, President Trump's tariffs are a significant source of uncertainty. Many experts say the economy has remained resilient so far due to artificial intelligence (AI) spending, but if tariffs become a meaningful headwind to corporate earnings growth, the stock market may perform much worse than Wall Street anticipates.
