The S&P 500 is on track to deliver gains above 20 percent for the second year in a row.
If the index pulls it off, it would be only the third time there have been back-to-back gains of that size in the past century, according to Deutsche Bank.
The S&P 500 tracks the performance of the 500 biggest companies in the US, including major tech companies such as Amazon and Apple, and banks including JPMorgan Chase and Bank of America.
The index has typically made an average annual return of 10 percent since its inception in 1957.
But the S&P 500 gained more than 24 percent in 2023, and is now up by about 26 percent on the year after last week’s rally following Donald Trump’s victory in the presidential election.
The S&P 500 is on track to deliver gains above 20 percent for the second year in a row
Rising stock market returns are good news for Americans invested in 401(K) and IRA retirement plans, which tend to be invested in the major market indices.
That means when Wall Street makes gains, so too do their savings.
The stock market soared following the news that Trump had won a second term in office.
The S&P 500 hit the 6,000 milestone on Friday – a record high.
A sweeping Trump victory powered bets of a business-friendly agenda, with expectations of lower corporate taxes and looser regulations.
‘Rallies following close elections have been the historical norm as we have previously noted,’ said Parag Thatte, a Deutsche Bank strategist, in a note on Friday.
‘But the current one is clearly faster than prior ones.’
Thatte said the market advance was ‘exceptional,’ even before last week’s surge to all-time highs, CNBC reported.
The S&P 500 is still within the upward trajectory seen over the past two years, but is now near the top of that, he said.
According to Dow Jones Market Data, the last time the index gained more than 20 percent in two consecutive years was in 1997 and 1998, in the midst of the dot-com bubble.
It had also added more than 20 percent in 1995 and 1996 – reaching four years in a row altogether.
Further back, stocks had not seen such strong rallies two years in a row since 1955, before the S&P 500 had even been introduced, MarketWatch reported.
The stock market soared following the news that Trump had won a second term in office
The Federal Reserve also cut interest rates again last week, amid a slowing labor market and cooling inflation
The central bank made a 25 basis point cut Thursday, bringing rates down between 4.5 percent and 4.75 percent
Historical data also implies further growth could be on the horizon for the S&P 500 this year.
Wall Street investment bank Oppenheimer looked at the 11 years in which the S&P 500 jumped more than 20 percent over the first 217 trading days.
In those years, the smallest additional gain from that point through the end of the year was 0.5 percent, CNBC reported.
That means that, if history repeats itself, the S&P 500 should end 2024 above 6,000.
The latest rally also came as an interest rate cut from the Federal Reserve eased pressure on the US economy.
The central bank made a 25 basis point cut on Thursday, in line with predictions from economists, bringing rates down between 4.5 percent and 4.75 percent.
Thursday’s decision is the second time the Fed has cut rates this year, amid a slowing labor market and cooling inflation.
Policymakers voted to cut interest rates by a bumper 50 basis points in September, bringing benchmark borrowing costs down from 23-year highs.