The Stock Market Is About To Do Something It's Only Done Three Times Since the Postwar Era. History Says This Is What Happens in 2026

The S&P 500 (SNPINDEX: ^GSPC) is set to close another banner year.

Through Dec. 15, the broad-market index was up 16%, and barring an unexpected crash, the index looks set to close out the year with another double-digit gain.

That would mark the third year in a row that the stock market has risen by double digits, following gains of 24.2% in 2023 and 23.3% in 2024. The S&P 500 is now up 77.5% since the end of 2022.

Racking up three straight years of double-digit gains isn't as common as you might think. After all, with the exception of 2022, the stock market has essentially been in a 16-year bull market now, but that's not the historic norm.

Image source: Getty Images.

This is only the third time since 1952 that the S&P 500 has gained 10% or more in three consecutive years. The other periods were 1995-1999, when it did so for five straight years during the dot-com boom; 2012-2014, during the middle of the 2010s bull market, and 2019-2021, which included the Covid-era stock market boom.

The tables below show the results for each of those periods.

Those are some of the best three-year performances in modern stock market history, but what happened after that?

Will the S&P 500 go up in 2026?

Well, we know what happened in the fourth year of the dot-com boom. Stocks continued to surge.

In the two more recent streaks, investors weren't as fortunate. In 2015, stocks slipped by a hair, falling 0.7%, and 2022 was the tech bear market that most investors probably remember. The S&P 500 lost 19.4% that year.

So in two of the three times that the S&P 500 put together three straight years of double-digit gains, it fell in the following year, though only barely in 2015.

However, the market's performance during the dot-com boom seems informative. After all, many investors see parallels between the current AI boom and the dot-com boom of the 1990s.

The explosion around AI has been the main driver of the stock market surge over the last three years, which began shortly after OpenAI launched ChatGPT in November 2022. Nvidia (NASDAQ: NVDA) has jumped by roughly 10x to a market cap of nearly $5 trillion because of AI, and the rest of the "Magnificent Seven" have jumped as well, in large part due to excitement around AI.

While there has been some concern about an AI bubble, there isn't much evidence that the companies leading the boom are slowing down, and Nvidia CEO Jensen Huang directly addressed those concerns on the company's recent earnings call, arguing that AI is, instead, at a tipping point where adoption was set to accelerate.

What it means for investors

Looking at stock market history can be informative, but there are no hard-and-fast rules in investing. As the expression goes, "History doesn't repeat itself, but it does rhyme."

It's worth remembering also that every bull market comes to an end at some point, and there are often several pauses in those run-ups, as we saw during the 2010s.

Though valuations are getting pricey, stocks could have another winning year in 2026. That will depend on whether the Fed continues to cut rates, the strength of the economy, whether AI demand remains on track, and other factors, like corporate profits, tariffs, and public policy.

However, the longer the streak of double-digit gains continues, the harder it will be to sustain it as earnings-per-share growth hasn't kept up.

While the AI surge will eventually slow and could lead to a pullback, the good news for investors is that the stock market's track record of creating wealth over the long term is unmatched. The S&P 500 has historically generated an average annual return of 9% with dividends reinvested.

In other words, no matter what happens next year or with the AI boom, over the long term, history clearly shows you're best off staying invested.

Jeremy Bowman has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.