More than 5,500 companies were listed on U.S. stock exchanges as of Q1 2026, according to the Security Industry and Financial Markets Association (SIFMA). Those stocks are grouped into different indexes that track various aspects of the domestic market.

The three most widely followed indexes are the S&P 500 (^GSPC -0.17%), Nasdaq Composite (^IXIC -0.28%), and Dow Jones Industrial Average (^DJI -0.20%). But the S&P 500 is generally considered the best gauge for the overall U.S. market.

Read on to learn how the S&P 500 performed during the past 20 years, and what Wall Street expects from the index in the next year.

Image source: Getty Images.

The S&P 500 returned 9.5% annually (excluding dividends) over the past 20 years

The S&P 500 was created in March 1957. The index is generally viewed as the best gauge for the U.S. stock market because it tracks 500 large companies, including value stocks and growth stocks from every market sector, that account for more than 80% of domestic equities by market capitalization.

Which stocks are included is ultimately at the discretion of a selection committee, but no company can be considered unless it meets certain eligibility criteria. That includes GAAP profitability during the past four quarters, a sufficiently liquid stock, and a minimum market capitalization of $22.7 billion.

The index is updated during quarterly rebalancing events, which happen on the third Friday of March, June, September, and December. Marvell Technology and Flex joined the index in June. But companies can be added at any time. Reddit will join the index later this month to replace AvalonBay Communities, which is being acquired by Equity Residential.

The S&P 500 is most heavily weighted toward technology stocks. The 10 largest positions in the index are, as listed by weight:

1. Nvidia: 8.1%
2. Apple: 6.7%
3. Microsoft: 5.5%
4. Alphabet: 5.4%
5. Amazon: 3.8%
6. Broadcom: 3%
7. Meta Platforms: 2%
8. Micron Technology: 1.6%
9. JPMorgan Chase: 1.5%
10. Eli Lilly: 1.4%
11. Tesla: 1.4%

Excluding dividends, the S&P 500 advanced 515% (9.5% annually) in the past two decades. Including dividends, the index achieved a total return of 800% (11.6% annually) during the same period.

Wall Street analysts expect the S&P 500 to advance 17% over the next year

Wall Street analysts expect S&P 500 earnings to increase 33% in 2026, an acceleration from 14% in 2025, according to LSEG. If accurate, that will represent the fastest growth since 2021. The energy and technology sectors are expected to lead the way because of elevated oil prices and heavy spending on artificial intelligence infrastructure.

In turn, most Wall Street analysts are forecasting substantial upside in the S&P 500 during the next year. The index has a median 12-month target level of 9,106, according to FactSet Research. That implies 17% upside from its current level of 7,786, which is well above the average of 9.5% annually over the past two decades.

At the sector level, analysts anticipate the most upside in communication services (24%), technology (22%), and consumer discretionary (18%) stocks. Of course, investors should never put too much weight on Wall Street's forecasts. Not even the most intelligent analyst can predict the future, and the market is entering what has historically been a difficult time of year.

During the past decade, the S&P 500 had declined by an average 2% in September, making it the worst month of the year by a wide margin. Additionally, the S&P 500 typically declines sharply ahead of midterm elections because the president's party generally loses seats in Congress, which creates policy uncertainty.

Here's the bottom line: In aggregate, S&P 500 companies in 2026 are projected to report the fastest earnings growth since 2021, driven primarily by heavy spending on AI infrastructure. In turn, analysts expect the S&P 500's return in the next year to crush the long-term average.