The total return for the S&P 500 (^GSPC -0.39%) during the first half of 2026 was 10.2%. That puts the index in some unique company. Over history, this tends to be a good omen for S&P 500 returns during the second half of the year.
The backdrop for 2026
This year features a U.S. economy that is in good but not great shape.
- GDP growth is in positive territory but showing signs of slowing. It came in at an annualized rate of 1.5% in Q2, down from Q1's 2.2% reading and well below the recent peak at 4.4% in Q3 2025.
- Inflation came in at 3.4% in July, which is off its 2026 highs but well above the Fed's 2% target rate.
- Unemployment is currently at 4.1% and has been below 5% every month since late 2021. Non-farm payroll numbers have been mixed, but the labor market appears to be in reasonable shape.
That backdrop, combined with the tailwind from the artificial intelligence (AI) boom, has kept sending stock prices higher. If it holds, this would be the fourth consecutive year of double-digit gains for the S&P 500.
Image source: Getty Images.
But a 10.2% gain for the index in the first half of a calendar year is more common than you might think.
- There have been 30 instances since 1927 when the S&P 500 gained 10% or more in the first half of the year. Of those, 23 finished with positive returns during the second half, a 77% win rate. The median and mean second-half gains were roughly plus-9% and plus-6%, respectively.
- After 1990, the positive second-half success rate is 100%. Before 1990 (19 instances), second-half returns were positive 63% of the time with a median return of plus-3%. After 1990 (11 instances), second-half returns were positive 100% of the time with a median return of nearly plus-10%.
Since 1990, here is a table of returns for the 11 prior instances when the S&P 500 was up double digits in the first half of the year.
| Year | 1st half return | 2nd half return | Full-year return |
|---|---|---|---|
| 1991 | +12.4% | +12.4% | +26.3% |
| 1995 | +18.6% | +13.1% | +34.1% |
| 1997 | +19.5% | +9.6% | +31% |
| 1998 | +16.8% | +8.4% | +26.7% |
| 1999 | +11.7% | +7% | +19.5% |
| 2003 | +10.8% | +14.1% | +26.4% |
| 2013 | +12.6% | +15.1% | +29.6% |
| 2019 | +17.3% | +9.8% | +28.9% |
| 2021 | +14.4% | +10.9% | +26.9% |
| 2023 | +15.9% | +7.2% | +24.2% |
| 2024 | +14.5% | +7.7% | +23.3% |
| 2026 | +10.2% | ? | ? |
Source data: Yahoo Finance.
These recent results are solid, but it's no guarantee of what might happen in 2026.
It's also important to note that some of the instances prior to 1990 occurred during very bad periods for stocks. For example, 1929 and 1933, which were during or around the Great Depression, both saw strong first halves followed by big declines in the second half. 1987 is another example of a big first half getting undone by a poor second half (in this case, the Black Monday crash).
While there's a strong history of good first halves turning into good second halves for the S&P 500, current conditions dictate how 2026 might turn out. We've got a strong earnings growth backdrop, which should help limit downside risk. Valuations are becoming a little more reasonable. Inflation and interest rates are still elevated, and those could pose headwinds to further gains.
Overall, I still see a positive environment for stocks, but I wouldn't bank on another 10% gain in the second half of the year just yet.
