What S&P 500 Gains of 9.5% in the First Half Signal for the Rest of the Year

On average, investors generally expect the market to provide roughly a 10% return each year. In fact, if you look at the long-term history of the S&P 500 index (SNPINDEX: ^GSPC), that's about what you get, assuming you reinvest dividends. So what should an investor make of the fact that the first six months of 2026 saw the S&P 500 index advance 9.5% on a price-only basis and nearly 10.2% with dividends reinvested?

What's in the market average?

The first issue to address regarding market returns is that it includes bull and bear markets. A bull market is when the market goes up 20%, while a bear market is when it falls 20%. Bull and bear markets represent moves much larger than 10% and highlight that the market does not just go up at a steady, comfortable pace. The markets can be, and often are, quite volatile.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

To be fair, if you bought and held the S&P 500 index over the long term, you would have seen the value of your portfolio rise dramatically. You can easily buy the index with a low-cost exchange-trade fund like Vanguard S&P 500 ETF (NYSEMKT: VOO). But you have had to hold on through some pretty trying periods. For example, since the turn of the century, SPDR S&P 500 ETF (NYSEMKT: SPY), the oldest ETF tracking this index, is up roughly 400% on a price-only basis, with reinvested dividends bringing the total return up to just over 700%.

SPY data by YCharts

But that period of time included the dot-com crash, the Great Recession, and the global COVID pandemic. Each one was highlighted by a bear market, and those bear markets didn't start on Jan. 1 of any given year or end on Dec. 31. And the subsequent bull markets didn't start on a specific calendar date, either. In other words, the stock market can move dramatically in either direction at any point during the year.

What does the first half of 2026 tell you?

Essentially, six months of market returns tell you nothing about what the future holds. This is the same reason why investment companies have to warn you that past performance is not indicative of future returns. That said, the S&P 500's long history provides some guidance: buying and holding (and reinvesting dividends) is a powerful long-term investment strategy. But it is one that will require you to stick it out through both the good and bad times, whenever they may arrive.